High-Low and Cost Formula Harrison Company has accumulated the following total manufacturing overhead costs for two levels of activity (within the relevant range): Activity (direct labor hours) Low High 90.000 130.000 Total manufacturing overhead $484,000 $628,000 The total overhead cost includes variable, fixed, and mixed costs. At 130,000 direct labor hours, the total cost breakdown is as follows: Variable cost Fixed cost $286.000 85,000 Semi-mixed cost $257,000 a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost component of the mixed cost. Isolate mixed costs: Do not use negative signs with your answers. Low High Total cost 05 0 Less: Variable cost 0 0 Fixed cost 0 0 Total mixed cost $ 05 0 High-Low Analysis: Round variable portion per unit to two decimal places, if applicable. Variable Direct Labor Hours Total Mixed Cost - Portion Fixed Portion High Low 05 o 0-5 0-5 0 0 0 0 Difference 05 0 Variable portion per unit: $ 0 b. What should the total planned overhead cost be at 115.000 direct labor hours? Variable Cost Per Unit Fixed Costs Variable cost $ o Fixed cost $ 0 Mixed Variable portion 0 Fixed portion 0 Totals 05 0 Total planned overhead for 115,000 direct labor hours $ 0
High-Low and Cost Formula Harrison Company has accumulated the following total manufacturing overhead costs for two levels of activity (within the relevant range): Activity (direct labor hours) Low High 90.000 130.000 Total manufacturing overhead $484,000 $628,000 The total overhead cost includes variable, fixed, and mixed costs. At 130,000 direct labor hours, the total cost breakdown is as follows: Variable cost Fixed cost $286.000 85,000 Semi-mixed cost $257,000 a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost component of the mixed cost. Isolate mixed costs: Do not use negative signs with your answers. Low High Total cost 05 0 Less: Variable cost 0 0 Fixed cost 0 0 Total mixed cost $ 05 0 High-Low Analysis: Round variable portion per unit to two decimal places, if applicable. Variable Direct Labor Hours Total Mixed Cost - Portion Fixed Portion High Low 05 o 0-5 0-5 0 0 0 0 Difference 05 0 Variable portion per unit: $ 0 b. What should the total planned overhead cost be at 115.000 direct labor hours? Variable Cost Per Unit Fixed Costs Variable cost $ o Fixed cost $ 0 Mixed Variable portion 0 Fixed portion 0 Totals 05 0 Total planned overhead for 115,000 direct labor hours $ 0
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
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Transcribed Image Text:High-Low and Cost Formula
Harrison Company has accumulated the following total manufacturing overhead costs for two levels of activity (within the relevant range):
Activity (direct labor hours)
Low
High
90.000 130.000
Total manufacturing overhead $484,000 $628,000
The total overhead cost includes variable, fixed, and mixed costs. At 130,000 direct labor hours, the total cost breakdown is as follows:
Variable cost
Fixed cost
$286.000
85,000
Semi-mixed cost $257,000
a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost component of the mixed cost.
Isolate mixed costs:
Do not use negative signs with your answers.
Low
High
Total cost
05
0
Less: Variable cost
0
0
Fixed cost
0
0
Total mixed cost $
05
0
High-Low Analysis:
Round variable portion per unit to two decimal places, if applicable.
Variable
Direct Labor Hours Total Mixed Cost -
Portion
Fixed
Portion
High
Low
05
o
0-5
0-5
0
0
0
0
Difference
05
0
Variable portion per unit: $ 0
b. What should the total planned overhead cost be at 115.000 direct labor hours?
Variable
Cost Per
Unit
Fixed Costs
Variable cost
$
o
Fixed cost
$
0
Mixed
Variable portion
0
Fixed portion
0
Totals
05
0
Total planned overhead for 115,000 direct labor hours $ 0
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