High-Low Method, Cost Formulas The controller of the South Charleston plant of Ravinia, Inc., monitored activities associated with materials handling costs. The high and low levels of resource usage occurred in September March for three different resources associated with materials handling. The number of moves is the driver. The total costs of the three resources and the activity output, as measured by mo for the two different levels, are presented as follows: Resource Number of Moves Total Cost Forklift depreciation: LOW 6,000 $3,200 High 19,000 3,200 Indirect labor: LOW 6,000 $72,800 High 19,000 135,200 Fuel and oil for forklift: LOW 6,000 $4,740 High 19,000 15,010 Required: If required. round vour answers to two decimal places. Enter a "O if required. 1. Determine the cost behavior formula of each resource. Use the high-low method to assess the fixed and variable components. Forklift depreciation: V $? F $? Y $? inarrect abor: V $? F $? Y $? + $?x Fuel and oil for forklift V $? F $? Y $?x 2. Using your knowledge of cost behavior, predict the cost of each item for an activity output level of 7,000 moves. Forklift depreciation Indirect labor Fuel and oil for forklift 3. Construct a cost formula that can be used to predict the total cost of the three resources combined. If required, round your answers to two decimal places. Materials handling cost = $ + Using this formula, predict the total materials handling cost if activity output is 7,000 moves Y= $?
High-Low Method, Cost Formulas The controller of the South Charleston plant of Ravinia, Inc., monitored activities associated with materials handling costs. The high and low levels of resource usage occurred in September March for three different resources associated with materials handling. The number of moves is the driver. The total costs of the three resources and the activity output, as measured by mo for the two different levels, are presented as follows: Resource Number of Moves Total Cost Forklift depreciation: LOW 6,000 $3,200 High 19,000 3,200 Indirect labor: LOW 6,000 $72,800 High 19,000 135,200 Fuel and oil for forklift: LOW 6,000 $4,740 High 19,000 15,010 Required: If required. round vour answers to two decimal places. Enter a "O if required. 1. Determine the cost behavior formula of each resource. Use the high-low method to assess the fixed and variable components. Forklift depreciation: V $? F $? Y $? inarrect abor: V $? F $? Y $? + $?x Fuel and oil for forklift V $? F $? Y $?x 2. Using your knowledge of cost behavior, predict the cost of each item for an activity output level of 7,000 moves. Forklift depreciation Indirect labor Fuel and oil for forklift 3. Construct a cost formula that can be used to predict the total cost of the three resources combined. If required, round your answers to two decimal places. Materials handling cost = $ + Using this formula, predict the total materials handling cost if activity output is 7,000 moves Y= $?
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High-Low Method, Cost Formulas
The controller of the South Charleston plant of Ravinia, Inc., monitored activities associated with materials handling costs. The high and low levels of resource usage occurred in September
March for three different resources associated with materials handling. The number of moves is the driver. The total costs of the three resources and the activity output, as measured by mo
for the two different levels, are presented as follows:
Resource
Number of Moves
Total Cost
Forklift depreciation :
LOW
6,000
$3,200
High
19,000
3,200
Indirect labor:
LOW
6,000
$72,800
High
19,000
135,200
Fuel and oil for forklift:
LOW
6,000
$4,740
High
19,000
15,010
Required:
If required. round vour answers to two decimal places. Enter a "O if required.
1. Determine the cost behavior formula of each resource. Use the high-low method to assess the fixed and variable components.
Forklift depreciation:
V $?
F $?
Y $?
inarrect abor:
V $?
F $?
Y $? + $?x
Fuel and oil for forklift
V $?
F $?
Y $?x
2. Using your knowledge of cost behavior, predict the cost of each item for an activity output level of 7,000 moves.
Forklift depreciation
Indirect labor
Fuel and oil for forklift
3. Construct a cost formula that can be used to predict the total cost of the three resources combined. If required, round your answers to two decimal places.
Materials handling cost = $
+
Using this formula, predict the total materials handling cost if activity output is 7,000 moves
Y= $?
Transcribed Image Text:High-Low Method, Cost Formulas
The controller of the South Charleston plant of Ravinia, Inc., monitored activities associated with materials handling costs. The high and low levels of resource usage occurred in September
March for three different resources associated with materials handling. The number of moves is the driver. The total costs of the three resources and the activity output, as measured by mov
for the two different levels, are presented as follows:
Resource
Number of Moves
Total Cost
Forklift depreciation:
Low
6,000
$3,200
High
19,000
3,200
Indirect labor:
Low
6,000
$72,800
High
19,000
135,200
Fuel and oil for forklift:
Low
6,000
$4,740
High
19,000
15,010
Required:
If required, round your answers to two decimal places. Enter a "0" if required.
1. Determine the cost behavior formula of each resource. Use the high-low method to assess the fixed and variable components.
Forklift depreciation:
F S
Y $
Indirect labor:
Transcribed Image Text:1. Determihe the cost behavior formula of each resource. Use the high-low method to assess the fixed and variable components.
Forklift depreciation:
F $
Y $
Indirect labor:
V
F S
Y S
Fuel and oil for forklift:
E S
Y S
2. Using your knowledge of cost behavior, predict the cost of each item for an activity output level of 7,000 moves.
Forklift depreciation
Indirect labor
Fuel and oil for forklift
3. Construct a cost formula that can be used to predict the total cost of the three resources combined. If required, round your answers to two decimal places.
Materials handling cost =
Using this formula, predict the total materials handling cost if activity output is 7,000 moves.
Y = $
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