Variable and fixed cost analysis; high-low method Miller Minerals Co. manufactures a product that requires the use of a considerable amount of natural gas to heat it to a desired tem- perature. The process requires a constant level of heat, so the fur- naces are maintained at a set temperature for 24 hours a day. Although units are not continuously processed, management desires that the variable cost be charged directly to the product and the fixed cost to the factory overhead. The following data have been collected for the year: Units Cost Units Cost January.. 2,400 $4,400 July .... 2,200 4,400 February. 2,300 4,300 August.. 2,100 4,100 March... 2,200 4,200 September. 2,000 3,800 April ... 2,000 4,000 October.... 1,400 3,450 May.... 1,800 3,800 November 1,900 3,700 June ... 1,900 3,900 December.... 1,800 4,050 Required: 1. Separate the variable and fixed elements, using the high-low method. 2. Determine the variable cost to be charged to the product for the year. (Hint: First determine the number of annual units produced.) 3. Determine the fixed cost to be charged to factory overhead for

Variable and fixed cost analysis; high-low method Miller Minerals Co. manufactures a product that requires the use of a considerable amount of natural gas to heat it to a desired tem- perature. The process requires a constant level of heat, so the fur- naces are maintained at a set temperature for 24 hours a day. Although units are not continuously processed, management desires that the variable cost be charged directly to the product and the fixed cost to the factory overhead. The following data have been collected for the year: Units Cost Units Cost January.. 2,400 $4,400 July .... 2,200 4,400 February. 2,300 4,300 August.. 2,100 4,100 March... 2,200 4,200 September. 2,000 3,800 April ... 2,000 4,000 October.... 1,400 3,450 May.... 1,800 3,800 November 1,900 3,700 June ... 1,900 3,900 December.... 1,800 4,050 Required: 1. Separate the variable and fixed elements, using the high-low method. 2. Determine the variable cost to be charged to the product for the year. (Hint: First determine the number of annual units produced.) 3. Determine the fixed cost to be charged to factory overhead for

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Question 1 Answer: Question 2 a Total Manufacturing Costs: Variable Fixed Factory Overhead Total Cost Per Unit b Markup Percentage % Seling Price
5
Please do not give solution in image format thanku
Q. 2 (b1)
Question 1 (i) A cost that can be traced to a cost object is known as A. A fixed cost B. A variable cost C. A direct cost D. An indirect cost (ii) Which of the following terms denotes the response of a cost to change in business activity: A. Cost accumulation B. Cost apportionment C. Cost reapportionment D. Cost behaviour (iii) Production of 100 units requires one supervisor at £30,000 p.a. If production is between 100-200 units then two supervisors are required at a total of £60,000 p.a. Such cost behaviour would be described as: A. Fixed B. Stepped fixed C. Variable D. Semi-variable
Choose the correct letter of answer On a scattergrap, the diagonal line cuts across two sets of observations, namely: 600:200, and 900:500 which refer to costs and units, respectively. The fixed costs is plotted in the graph at P400. In this case, the variable cost per unit is equal to: a. P1.00b. P1.25c. P1.50d. P1.12