Fiske Corporation manufactures a popular regional brand of kitchen utensils. The design and variety have been fairly constant over the last three years. The managers at Fiske are planning for some changes in the product line next year, but first they want to understand better the relation between activity and factory costs as experienced with the current products. Discussions with the plant supervisor suggest that overhead seems to vary with labor-hours, machine-hours, or both. The following data were collected from the last three years of operations: Quarter 1 2 3 4 5 9 910 12 11 Required: Machine-Hours 18,850 18,590 17,480 19,240 21,280 19,630 19,240 18,850 18,460 20,670 17,550 18,460 Labor-Hours 14,905 15,477 16,720 15,983 17,501 17,369 Required A Required B 15,290 14,366 15,994 16,995 14,278 21,244 Factory costs $3,388,671 3,425, 136 3,617,144 3,573,240 3,812, 284 3,777,312 3,531,726 3,369,102 3,512,487 3,730, 734 2,898,315 3,723,786 a. Use the high-low method to estimate the fixed and variable portions of factory costs based on machine-hours. b. Managers expect the plant to operate at 30,000 machine-hours next quarter. Assuming the relationship remains the same with the new product line, what are the estimated quarterly factory costs? Complete this question by entering your answers in the tabs below. Managers expect the plant to operate at 30,000 machine-hours next quarter. Assuming the relationship remains the same with the new product line, what are the estimated quarterly factory costs? Note: Round "Variable cost" to 2 decimal places. Estimated quarterly factory costs

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter5: Product And Service Costing: Job-order System

Section: Chapter Questions

Problem 27P: Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming...

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Transcribed Image Text:es Fiske Corporation manufactures a popular regional brand of kitchen utensils. The design and variety have been fairly constant over the last three years. The managers at Fiske are planning for some changes in the product line next year, but first they want to understand better the relation between activity and factory costs as experienced with the current products. Discussions with the plant supervisor suggest that overhead seems to vary with labor-hours, machine-hours, or both. The following data were collected from the last three years of operations: Quarter 1 2 3 4 5 6 7 8 9 10 11 12 Machine-Hours 18,850 18,590 17,480 19,240 21,280 19,630 19,240 18,850 18,460 20,670 17,550 18,460 Labor-Hours 14,905 15,477 16,720 15,983 17,501 17,369 15,290 14,366 15,994 16,995 14,278 21,244 Required A Required B Factory costs $ 3,388,671 3,425, 136 3,617,144 3,573,240 3,812,284 3,777,312 3,531,726 3,369,102 3,512,487 3,730,734 2,898,315 3,723,786 K Required: a. Use the high-low method to estimate the fixed and variable portions of factory costs based on machine-hours. b. Managers expect the plant to operate at 30,000 machine-hours next quarter. Assuming the relationship remains the same with the new product line, what are the estimated quarterly factory costs? Complete this question by entering your answers in the tabs below. Managers expect the plant to operate at 30,000 machine-hours next quarter. Assuming the relationship remains the same with the new product line, what are the estimated quarterly factory costs? Note: Round "Variable cost" to 2 decimal places. Estimated quarterly factory costs

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