Cost Accounting42Problem 10estimateoverhead costs to plan its operations. A recent trade publication revealed thatoverhead costs tend to vary with machine hours. To check this, they collected thefollowing data for the past 12 months.ValdezMotors Co. makes motorcycles. Management wants toOverhead CostsP 4,5004,2254,3215,2504,8005,1004,4504,2005,4754,7604,3253,975Machine Hours175Month No.170316041901756.20071608.1509.210101801701112145Requirements1. Use the high-low method to estimate the fixed and variable portion ofoverhead costs based on machine hours.2. If the plant is planning to operate at a level of 200 machine hours nextperiod, what would be the estimated overhead costs?3. Use the method of least square to estimate the fixed and variable portion ofoverhead costs based on machine hours.

The question is based on the concept of Cost Accounting.

Problem 10 estimate Valdez Motors Co. makes motorcycles. Management wants to overhead costs to plan its operations. A recent trade publication revealed that overhead costs tend to vary with machine hours. To check this, they collected the following data for the past 12 months. Overhead Costs P 4,500 4,225 4,321 5,250 Machine Hours 175 Month No. 170 160 190 1.000 34

Problem 10 estimate Valdez Motors Co. makes motorcycles. Management wants to overhead costs to plan its operations. A recent trade publication revealed that overhead costs tend to vary with machine hours. To check this, they collected the following data for the past 12 months. Overhead Costs P 4,500 4,225 4,321 5,250 Machine Hours 175 Month No. 170 160 190 1.000 34

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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1 part 1
Figure 4 Steele Ltd. has the following information for January, February, and March 2011: Units produced Units sold January 10,000 7,000 February 10,000 March 10,000 8,500 10,500 Production costs per unit (based on 10,000 units) are as follows: Direct materials GHS12 Direct labour Variable factory overhead Fixed factory overhead Variable selling and admin. expenses Fixed selling and admin. expenses 4 10 4 There were no beginning inventories for January 2011, and all units were sold for GHS50. Costs are stable over the three months. 21. Refer to Figure 4. What is the January ending inventory for Steele Ltd. Using the variable costing method? a. GHS260,000 b. GHS78,000 c. GHS108,000 d. GHS90,000
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