Dallus wants to examine the behaviour of maintenance costs for budgeting purpose. The following data on machine hours worked and maintenance costs for the past year are col Month Machine Hours Maintenance Cost January 18,000 February 15,000 March 12,750 21,000 April May June 11,880 14,500 $20,600 18,900 15,100 22,010 13,200 19,500
Dallus wants to examine the behaviour of maintenance costs for budgeting purpose. The following data on machine hours worked and maintenance costs for the past year are col Month Machine Hours Maintenance Cost January 18,000 February 15,000 March 12,750 21,000 April May June 11,880 14,500 $20,600 18,900 15,100 22,010 13,200 19,500
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter19: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 2CMA: Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing...
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A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Dallus wants to examine the behaviour of maintenance costs for budgeting purpose. The
following data on machine hours worked and maintenance costs for the past year are collected:
Month Machine Hours Maintenance Cost
January
18,000
February 15,000
March
12,750
21,000
April
May
June
11,880
14,500
July
19,000
August
14,880
September 10,000
October
13,360
November 16,600
December 18,800
$20,600
18,900
15,100
22,010
13,200
19,500
25,000
19,874
12,000
15,500
19,800
13,500
Required:
a. Use the high-low method to estimate the variable cost per machine hour and the fixed cost
per month.
b. Plot and comment on the estimated cost function.
C. Develop a formula to express the cost behaviour of ABC's maintenance costs.
d. According to the budget, the machine is expected to work 200,000 hours next year. How
much is the budgeted maintenance costs?
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