2. Gemini is having trouble understanding its manufacturing overhead costs. A couple of years ago, management used the conference method and determined that the its monthly manufacturing overhead costs consisted of $10,000 plus $50 for every machine hour. The actual costs and those based on the conference method were significantly different from each other the last few months. Management has asked you to analyze its costs to better predict manufacturing overhead costs. Management has the following data from the past year for you. Manufacturing Month Machine Hours Overhead Costs 1 1,200 $74,000 1,000 70,000 1,400 82,000 4 1,700 86,000 1,650 87,500 1,800 87,000 7 1,900 92,000 1,800 90,000 9 2,000 98,000 10 3,000 130,000 11 2,200 102,000 12 2,600 109,000 1. Use the High-Low method and estimate the linear cost relationship for manufacturing overhead costs. 2. Compare the predicted costs for months 11 and 12 using your cost relationship to that previously used. Which is better and why? 3. What do you recommend to management? 3.

2. Gemini is having trouble understanding its manufacturing overhead costs. A couple of years ago, management used the conference method and determined that the its monthly manufacturing overhead costs consisted of $10,000 plus $50 for every machine hour. The actual costs and those based on the conference method were significantly different from each other the last few months. Management has asked you to analyze its costs to better predict manufacturing overhead costs. Management has the following data from the past year for you. Manufacturing Month Machine Hours Overhead Costs 1 1,200 $74,000 1,000 70,000 1,400 82,000 4 1,700 86,000 1,650 87,500 1,800 87,000 7 1,900 92,000 1,800 90,000 9 2,000 98,000 10 3,000 130,000 11 2,200 102,000 12 2,600 109,000 1. Use the High-Low method and estimate the linear cost relationship for manufacturing overhead costs. 2. Compare the predicted costs for months 11 and 12 using your cost relationship to that previously used. Which is better and why? 3. What do you recommend to management? 3.

Name: 2. Gemini is having trouble understanding its manufacturing overhead
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Description: 2. Gemini is having trouble understanding its manufacturing overhead costs. A couple of years ago, management used the conference method anddetermined that the its monthly manufacturing overhead costs consisted of $10,000 plus $50 for every machine

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 2PB: Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500...

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