Answered: linear cost function

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 15E: The books of Petry Products Co. revealed that the following general journal entry had been made at...

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4. High Tech Manufacturing Inc., incurred total indirect manufacturing labor costs of $490,000. The company is labor intensive. Total labor hours during the period were 4,100. Using qualitative analysis, the manager and the management accountant determine that over the period the indirect manufacturing labor costs are mixed costs with only one cost driver–labor-hours. They separated the total indirect manufacturing labor costs into costs that are fixed ($120,000 based on 8,600 hours of labor) and costs that are variable ($370,000) based on the number of labor-hours used. The company has estimated 7,300 labor hours during the next period. Which of the following represents the correct linear cost function? A) y = $370,000 + $43.02X B) y = $120,000 + $119.51X C) y = $120,000 + $90.24X D) y = $370,000 + $56.98X

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