Question 3 Beta Company manufactures a single product. The Company keeps its records of manufacturing activities from which the following information has been extracted: Number of units produced Cost of goods manufactured Work in process, beginning Work in process, ending Direct materials cost per unit Direct labor cost per unit Manufacturing overhead cost, Total Level of Activity March-Low June-High 6,000 9,000 $168,000 $257,000 $9,000 $32,000 $15,000 $21,000 $6.00 $6.00 $10.00 $10.00 ? ? 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 is variable with units produced and how much of it is fixed per month. Required: a. For both March and June, estimate the amount of manufacturing overhead cost added to production. The company had no under- or overapplied overhead in either month. (20 marks) b. Using the high-low method, develop a cost estimated formula for manufacturing overhead. (8 marks) c. If 7,000 units are produced during a month, prepare a DETAILED schedule of the cost of goods manufactured. (Assume that work in process inventories do not change and that there is no under- or overapplied overhead cost for the month.) (12 marks) [Total: 40 marks]

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
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Chapter6: Activity-based, Variable, And Absorption Costing
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Question 3
Beta Company manufactures a single product. The Company keeps its records of manufacturing
activities from which the following information has been extracted:
Number of units produced
Cost of goods manufactured
Work in process, beginning
Work in process, ending
Direct materials cost per unit
Direct labor cost per unit
Manufacturing overhead cost, Total
Level of Activity
March-Low
June-High
6,000
9,000
$168,000
$257,000
$9,000
$32,000
$15,000
$21,000
$6.00
$6.00
$10.00
$10.00
?
?
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 is
variable with units produced and how much of it is fixed per month.
Required:
a.
For both March and June, estimate the amount of manufacturing overhead cost added to
production. The company had no under- or overapplied overhead in either month.
(20 marks)
b. Using the high-low method, develop a cost estimated formula for manufacturing overhead.
(8 marks)
c. If 7,000 units are produced during a month, prepare a DETAILED schedule of the cost of
goods manufactured. (Assume that work in process inventories do not change and that
there is no under- or overapplied overhead cost for the month.)
(12 marks)
[Total: 40 marks]
Transcribed Image Text:Question 3 Beta Company manufactures a single product. The Company keeps its records of manufacturing activities from which the following information has been extracted: Number of units produced Cost of goods manufactured Work in process, beginning Work in process, ending Direct materials cost per unit Direct labor cost per unit Manufacturing overhead cost, Total Level of Activity March-Low June-High 6,000 9,000 $168,000 $257,000 $9,000 $32,000 $15,000 $21,000 $6.00 $6.00 $10.00 $10.00 ? ? 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 is variable with units produced and how much of it is fixed per month. Required: a. For both March and June, estimate the amount of manufacturing overhead cost added to production. The company had no under- or overapplied overhead in either month. (20 marks) b. Using the high-low method, develop a cost estimated formula for manufacturing overhead. (8 marks) c. If 7,000 units are produced during a month, prepare a DETAILED schedule of the cost of goods manufactured. (Assume that work in process inventories do not change and that there is no under- or overapplied overhead cost for the month.) (12 marks) [Total: 40 marks]
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ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College