REQUIRED a) Using the high-low method, determine the fixed and variable components of the maintenance costs. b) Briefly explain advantage using ABC Costing in management Systems
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- Steeler Towel Company estimates its overhead to be $250,000. It expects to have 100,000 direct labor hours costing $2,500,000 in labor and utilizing 12,500 machine hours. Calculate the predetermined overhead rate using: A. Direct labor hours B. Direct labor dollars C. Machine hoursYork Company Is a machine shop that estimated overhead will be $50,000, consisting of 5,000 hours of direct labor. The cost to make job 0325 is $70 in aluminum and two hours of labor at $20 per hour. During the month. York incurs $50 in indirect material cost. $150 in administrative labor, $300 in utilities, and $250 in depreciation expense. What is the predetermined overhead rate if direct labor hours are considered the cost driver? What is the cost of Job 0325? What is the overhead incurred during the month?Travis Inc. employed several maintenance engineers to keep the equipment running in peak condition. Over the past eight months, Travis incurred the following maintenance cost for these engineers. Plant activity is best measured by direct labor hours. Month Direct Labor Hours Maintenance Cost January 1,700 $14,300 February 1,900 $15,200 March 1,800 $16,700 April 1,600 $14,000 May 1,500 $14,300 June 1,300 $13,000 July 1,100 $12,800 August 1,400 $14,200 Required: Using the high-low method, determine the fixed and variable components of the maintenance costs.
- The management of Casablanca Manufacturing Corporation believes that machine- hours is an appropriate measure of activity for overhead cost Shown below are machine hours and total overhead cost for the past six months: Machine- hours Overhead Cost Jan 150,000 P339,000 Feb 140,000 P328,000 Mar 160,000 P350,000 Apr 130,000 P319,500 May 170,000 P362,500 Jun 200,000 P400,000 Assume that the relevant range included all of the activity levels mentioned in this problem. If Casablanca expects to incur 185,000 machine hours next month, what will the estimated total overhead cost be using the high-low method?Angler Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year's expected costs and activities are shown below. Assembly 248,888 DLH Finishing 154,000 DLH 68,000 MH 448,800 MH $440,000 Direct labor hours Machine hours Overhead costs Assume that Angler Industries allocates overhead using a plantvide overhead rate based on machine hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 3.90 machine hours in the Assembly Department, and 4.00 direct labor hours and 0.6 machine hours in the Finishing Department? Multiple Chaises O O O $21.50 $17.60 $2.00. $18.10 $ 677,680 $13.20.Rocks Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are: Activity Overhead per Activity Annual Usage Machine Set Up $75,000 6,000 Machine Hours $85,002 5,484 Inspections $70,000 20,000 Compute the overhead rate for each activity.
- The management of Casablanca Manufacturing Corporation believes that machine-hours is an appropriate measure of activity for overhead cost Shown below are machine-hours and total overhead costs for the past six months: Machine- Overhead Нours Cost Jan 150,000 P339,000 Feb 140,000 P328,000 Mar 160,000 P350,000 Apr 130,000 P319,500 May 170,000 P362,500 Jun 200,000 P400,000 Assume that the relevant range includes all of the activity levels mentioned in this problem. If Casablanca expects to incur 185,000 machine hours next month, what will the estimated total overhead cost be using the high-low method?Digger Inc. sells a high-speed retrieval system for mining information. It provides the following information for the year.Overhead cost Machine hours Direct labor hoursBudgeted$975,000 50,000 100,000Actual$950,000 45,000 92,000Overhead is applied on the basis of direct labor hours. (a) Compute the predetermined overhead rate. (b) Determine the amount of overhead applied for the year.Nova Company's total overhead cost at various levels of activity are presented below: Total Overhead Cost $ 210,600 $ 184,200 $ 237,000 $ 263,400 Month April May June July Machine-Hours 50,000 40,000 60,000 70,000 Assume the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 40,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 56,000 60,000 68,200 $ 184,200 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $263,400 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $263,400 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) 2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bx. 3.…
- Crosshill Company's total overhead costs at various levels of activity are presented below: Month Machine- Hours Total Overhead Cost April 70,000 $ 202,200 May 60,000 $ 180,300 June 80,000 $ 224,100 July 90,000 $ 246,000 Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 60,000-machine-hour level of activity in May is as follows: Utilities (variable) $ 52,200 Supervisory salaries (fixed) 21,000 Maintenance (mixed) 107,100 Total overhead cost $ 180,300 The company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $246,000 of overhead cost in July was maintenance cost. (Hint: To do this, first determine how much of the $246,000 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.) (Round the "Variable cost per unit" to 2 decimal places.) 2. Using the high-low…Digger Inc. sells a high-speed retrieval system for mining information. It provides the following information for the year. Budgeted Actual Overhead cost $1,513,600 $1,486,600 Machine hours 56,600 47,700 Direct labor hours 110,000 104,000 Overhead is applied on the basis of direct labor hours. Compute the predetermined overhead rate. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate per direct labor hour LINK TO TEXT INTERACTIVE TUTORIAL Determine the amount of overhead applied for the year. Amount of overhead appliedNova Company’s total overhead cost at various levels of activity are presented below: Month Machine-Hours TotalOverheadCost April 52,000 $ 202,860 May 42,000 $ 179,060 June 62,000 $ 226,660 July 72,000 $ 250,460 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 42,000 machine-hour level of activity is: Utilities (variable) $ 50,400 Supervisory salaries (fixed) 66,000 Maintenance (mixed) 62,660 Total overhead cost $ 179,060 Nova Company’s management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $250,460 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $250,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) 2. Using the high-low…