The KING Company would like you to estimate the maintenance costs on its delivery trucks. The cost is a mixed cost. The following data is obtained for the first 6 months of the year: Mileage Costs ($) 17,000 January 12,000 February 10,000 16,700 March 12,800 15,200 April 11,000 15,920 May 16,000 21,200 June 14,000 18,080 Compute the fixed cost portion using the High-Low Method of estimating costs. A. $9,200 B. $10,000 C. $18,400 D. $17,500

The KING Company would like you to estimate the maintenance costs on its delivery trucks. The cost is a mixed cost. The following data is obtained for the first 6 months of the year: Mileage Costs ($) 17,000 January 12,000 February 10,000 16,700 March 12,800 15,200 April 11,000 15,920 May 16,000 21,200 June 14,000 18,080 Compute the fixed cost portion using the High-Low Method of estimating costs. A. $9,200 B. $10,000 C. $18,400 D. $17,500

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 1CE: The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:...

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Calculating and Using a Single Charging Rate The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): $72,930 per year Variable costs (supplies): $1.30 per maintenance hour Estimated usage by: Assembly Department 4,900 Fabricating Department 6,200 Packaging Department 11.000 Total maintenance hours 22,100 Actual usage by: Assembly Department 3,425 Fabricating Department 6,300 Packaging Department 10,200 Total maintenance hours 19,925 Required: 1. Calculate a single charging rate for the Maintenance Department. Round your answer to the nearest cent. per maintenance hour 2. Use this rate to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year. 3. What if the Assembly Department used 4,000 maintenance hours in the year? How much would have been charged out to the three departments? when required, round your answers…
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