Mudhaiby Co. gathered the following information on power costs and factory machine usage for the last Six months: Month Power Cost Factory Machine Hours | January R.O.24,400 13,900 February 29,200 17,600 March 29,000 16,800 April 22,340 13,200 May 19,900 11,600 June 14,900 6,600 Instructions Using the high-low method of analyzing costs, answer the following questions and show computations to support your answers. (a) What is the estimated variable portion of power costs per factory machine hour? (b) What is the estimated fixed power cost each month? (c) If it is estimated that 10,000 factory machine hours will be run in July, what is the expected total power cost for July?

Mudhaiby Co. gathered the following information on power costs and factory machine usage for the last Six months: Month Power Cost Factory Machine Hours | January R.O.24,400 13,900 February 29,200 17,600 March 29,000 16,800 April 22,340 13,200 May 19,900 11,600 June 14,900 6,600 Instructions Using the high-low method of analyzing costs, answer the following questions and show computations to support your answers. (a) What is the estimated variable portion of power costs per factory machine hour? (b) What is the estimated fixed power cost each month? (c) If it is estimated that 10,000 factory machine hours will be run in July, what is the expected total power cost for July?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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- ok k int ences w 3 E Overhead information for Cran-Mar Company for October follows: Total factory overhead cost incurred Budgeted fixed factory overhead cost Total standard overhead rate per machine hour (MH) D Standard variable factory overhead rate per MH Standard MHS allowed for the units manufactured here to search Required: 1. What is the standard fixed factory overhead rate per machine hour (MH)? 2. What is the denominator activity level that was used to establish the fixed factory overhead application rate? 3. Two-way analysis (breakdown) of the total factory overhead cost variance: calculate the following factory overhead cost variances for October and indicate whether each variance is favorable (F) or unfavorable (U). a. Total flexible-budget variance. b. Production volume variance. c. Total overhead cost variance. 4. Calculate the production volume variance and indicate whether the variance is favorable (F) or unfavorable (U). Complete this question by entering your answers…
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