Problem 3-11 High–Low Method; Cost of Goods Manufactured [LO2]Sarnia Ltd. is a manufacturing company that produces a single product. The company keeps meticulous records of manufacturing activities from which the following information has been extracted: March—LowJune—HighNumber of units produced 6,040 9,060 Cost of goods manufactured$174,720 $271,000 Work in process inventory, beginning$12,600 $44,800 Work in process inventory, ending$21,000 $29,400 Direct materials cost per unit$6 6 Direct labour cost per unit$10 10 Manufacturing overhead cost, total ? ? The company’s manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning, management wants to determine how much of the overhead cost varies with the number of units produced versus how much is fixed per month. Required:1. For both March and June, estimate the amount of manufacturing overhead cost added to production. 2. Using the high-low method, estimate a cost formula for manufacturing overhead. 3. If 7,040 units are produced during a month, what would be the cost of goods manufactured? Assume that work in process inventories do not change. Sarnla Ltd. Is a manufacturing company that produces a single product. The company keeps meticulous records of manufacturingactivities from which the following information has been extracted:萬Mar ch-LowJune- Hi ghNumber of units producedCost of goods manufacturedWork in process inventory, beginningWork in process inventory, endingDirect materials cost per unitDirect labour cost per unitManufacturing overhead cost, total6, 040$174, 720$ 12, 600$ 21,0009,060$271, 000$ 44, 800$ 29, 400661010The company's manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning,management wants to determine how much of the overhead cost varies with the number of units produced versus how much is fixedper month.Requlred:1. For both March and June, estimate the amount of manufacturing overhead cost added to production.Manufacturing overhead cost for MarchManufacturing overhead cost for June2. Using the high-low method, estimate a cost formula for manufacturing overhead.Y=3. If 7,040 units are produced during a month, what would be the cost of goods manufactured? Assume that work in processinventories do not change.Cost of goods manufactured

Manufacturing overhead means all indirect costs or expenses that are incurred for production and…

Problem 3-11 High–Low Method; Cost of Goods Manufactured [LO2] Sarnia Ltd. is a manufacturing company that produces a single product. The company keeps meticulous records of manufacturing activities from which the following information has been extracted: March—Low June—High Number of units produced 6,040 9,060 Cost of goods manufactured $ 174,720 $ 271,000 Work in process inventory, beginning $ 12,600 $ 44,800 Work in process inventory, ending $ 21,000 $ 29,400 Direct materials cost per unit $ 6 6 Direct labour cost per unit $ 10 10 Manufacturing overhead cost, total ? ? The company’s manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning, management wants to determine how much of the overhead cost varies with the number of units produced versus how much is fixed per month. Required: 1. For both March and June, estimate the amount of manufacturing overhead cost added to production. 2. Using the high-low method, estimate a cost formula for manufacturing overhead. 3. If 7,040 units are produced during a month, what would be the cost of goods manufactured? Assume that work in process inventories do not change.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Problem 3-11 High–Low Method; Cost of Goods Manufactured [LO2]

Sarnia Ltd. is a manufacturing company that produces a single product. The company keeps meticulous records of manufacturing activities from which the following information has been extracted:

	March—Low	June—High
Number of units produced		6,040		9,060
Cost of goods manufactured	$	174,720	$	271,000
Work in process inventory, beginning	$	12,600	$	44,800
Work in process inventory, ending	$	21,000	$	29,400
Direct materials cost per unit	$	6		6
Direct labour cost per unit	$	10		10
Manufacturing overhead cost, total		?		?

The company’s manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning, management wants to determine how much of the overhead cost varies with the number of units produced versus how much is fixed per month.

Required:

1. For both March and June, estimate the amount of manufacturing overhead cost added to production.

2. Using the high-low method, estimate a cost formula for manufacturing overhead.

3. If 7,040 units are produced during a month, what would be the cost of goods manufactured? Assume that work in process inventories do not change.