Required:i) Using the above information derive a cost function that can be used to predict the total production overheads cost using the high-low cost estimation method. (d) Gilbert Itd is a furniture manufacturer. The following information relates to the total productionoverheads cost incurred in the production. The company uses Direct labour hours activity levelin deriving the cost function for predicting the total production overheads cost.Page 2 of 4MonthTotal production overheads Machine HourscostJanuary 2020246,50017,000 HrsApril 2020251,75018,500 Hrs

High-low cost estimation method is used to segregate the fixed cost and variable cost element in…

Answered: Using the above information derive a…

Using the above information derive a cost function that can be used to predict the total production overheads cost using the high-low cost estimation method.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 11EB: A company has the following information relating to its production costs: Compute the actual and...

See similar textbooks

Related questions

Q: What is equivalent production? Explain in terms of its effect on computed unit costs.

A: Process costing: It is a type of costing method, where the direct costs are accumulated and indirect…

Q: What formula do we use in accounting to determine estimated total manufacturing overhead (MOH)?…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: Cost estimation is the process of a. Summarizing pwst costs into fixed variable components.…

A: Solution: Cost estimation is the process of "Estimating the relationship between costs and the costs…

Q: Equivalent units of production must be calculated before the unit production costs can be computed.

A: The unit product cost is calculated by multiplying the equivalent units by the cost per unit.…

Q: Which of the following represent the right process order for cost allocation: Select one: O a.…

A: Cost Allocation is the process of identifying and assigning costs to the various cost objects. These…

Q: Prepare (a) Statement of Equivalent Production Equivalent Units Input Units Output Items Units Qty…

A: Statement of Equivalent production Statement of Cost Statement of Valuation

Q: 2) Which of the following is the type of cost calculated with a scientific and engineering approach…

A: A company will incur various costs to earn revenue. The costs can be either direct or indirect costs…

Q: Which of the following must be known about a production process in order to institute a variable…

A: In order to institute a variable costing system, an organisation must aware about the varible and…

Q: From the following data find (A) material cost, (B) price cost, (C) direct cost,

A: "Hey, since there are multiple questions posted, we will answer the first question. If you want any…

Q: Both the equivalent units schedules and the physical flow are prerequisites to calculating the…

A: The question is related to Process Costing. There are two methods of equivalent units 1. FIFO 2.…

Q: Need help to calculate the production cost per unit

A: The financial position of the company can be arrived from the income statement prepared by the…

Q: Which of the following is NOT a period cost? Select one: O a. manufacturing costs. O b. general and…

A: Product cost means the cost of producing one unit of finished goods. Period cost means the cost that…

Q: Which of the following are assumptions associated with the cost equation? Check all that apply. The…

A: Cost equation means a line or formula which shows both types of cost like fixed costs and variable…

Q: Which costing techniques are related to a predetermined cost as a performance targe and actual…

A: Solution: "Standard costing" are related to a predetermined cost as a performance target and actual…

Q: According to the activity-based costing system, the average cost of product YBY is closest to

A: Average cost is the component of cost accounting which accumulates all the cost and determine the…

Q: Complete a locational cost–volume analysis graphically and mathematically

A: Locational cost volume analysis is way to find the volume of production at which the company break…

Q: Compute predeterminedoverhead rates and explainwhy estimated overhead costs(r ather than actual…

A: Cost: It is the economic value incurred by the business to manufacture a product or to render a…

Q: Please explain the statement below (T/F) thoroughly with examples illustrating the answer. "To…

A: "Activity-based costing is one of the costing methods that is structured and designed in such a way…

Q: When using the visual-fit method to estimate a cost function, we can estimate the fixed cost by O…

A: Visual Fit Method It is the most common method used by analysts for examining the cost by the way…

Q: What formula do we use in accounting to determine estimated total manufacturing overhead (MOH)?…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: Explain how to prepare production cost report using the weighted average method.

A: Process cost summary: Process cost summary is prepared separately for each production department or…

Q: Explain the main conceptual issue under variable costing and absorption costing regarding the timing…

A: Variable Costing: The variable costing is a method used to allocate the fixed manufacturing…

Q: The first step in determining the cost per EUP per cost component under the weighted average method…

A: Introduction:- EUPs shows the number of completed goods that could have been produced using the…

Q: Compute for the cost of WIP, end using Average costing.

A: Average costing: Weighted-average costing used to value the cost of finished goods and ending work…

Q: Which of the following statements is true? Select one: O a. The most complex of the cost estimation…

A: High-low method: It is the method of estimating the variable cost per unit and the fixed costs by…

Q: The first step in applying the average cost method when computing for the unit cost is to: a. Add…

A: The question is related to Process Costing method. The average cost method assigns total cost of…

Q: Indicate whether the following statement is true or false, then support your view. By using a…

A: Traditional method of costing is the method of allocating overheads based on the single cost driver.…

Q: Classify each cost element as either fixed, variable, or mixed

A: Variable Cost: variable cost is the cost that varies in total cost with change in the unit…

Q: It is important to understand variable and fixed costs, average expenses, and the overall costs.

A: Introduction: We're only responding to the first three subparts, so if you have a question that…

Q: Which of the following best defines standard costing? a. It is the same as actual costing but…

A: The method of calculating the cost of a manufacturing process is known as standard costing. It's a…

Q: COST ACCOUNTING - Process Costing Make a table for the solution. Compute for the equivalent…

A: The equivalent units are calculated on the basis of percentage for the completion of the work during…

Q: a) Classify each cost element as either fixed, variable, or mixed b) Calculate: i) the variable…

A: Workings Particulars Lower limit Upper limit Using High-low method Variable Fixed…

Q: The overhead absorption rate used to allocate manufacturing overhead is calculated by: Select one:…

A: Total Estimated Manufacturing Overheads Overhead…

Q: Compute the actual manufacturing overhead. Compute the applied manufacturing overhead. Compute the…

A: Solution:- Calculation of the actual manufacturing overheads.

Q: Required: Compute the unit product cost under absorption costing. Compute the unit product cost…

A: Variable costing means that inventory is valued at variable manufacturing cost and fixed cost is…

Q: Compute for the total cost accounted for using FIFO.

A: First in First out Method(FIFO)- Under this method of calculating the cost of goods transferred and…

Q: Which of the following correctly describes the term cost driver? a. The inflation rate which causes…

A: Cost driver are the compotents that are directly related to the product that determine the cost of…

Q: Classify each cost element as either fixed, variable or mixed Calculate: the variable production…

A: Using high low method, variable cost per unit is calculated as follows: Variable cost per unit=…

Q: Specify the advantage of the weighted-average method of process costing in contrast to the FIFO…

A: Process Costing: Process costing is a costing system of accounting methodology that accumulates…

Q: Equivalent units of production must be calculated before the unit production costs can be computed.…

Q: Explain an example how to calculate total costs.

A: Total c osts represents overall costs incurred to produce or procure a product.

Q: Which of the following is the correct formula to compute the predetermined overhead rate? a.…

A: Predetermined overhead rate is calculated before the period begins therefore it is based on…

Question

Required:
i) Using the above information derive a cost function that can be used to predict the total
production overheads cost using the high-low cost estimation method.

(d) Gilbert Itd is a furniture manufacturer. The following information relates to the total production
overheads cost incurred in the production. The company uses Direct labour hours activity level
in deriving the cost function for predicting the total production overheads cost.
Page 2 of 4
Month
Total production overheads Machine Hours
cost
January 2020
246,500
17,000 Hrs
April 2020
251,750
18,500 Hrs

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
Freeman Furnishings has summarized its data as shown: Compute the cost of goods manufactured, assuming that the overhead is allocated based on direct labor hours
The following data appeared in the accounting records of Craig Manufacturing Inc., which uses the weighted average cost method: Case 1All materials are added at the beginning of the process, and labor and factory overhead are added evenly throughout the process. Case 2One-half of the materials are added at the start of the manufacturing process, and the balance of the materials is added when the units are one-half completed. Labor and factory overhead are applied evenly during the process. Make the following computations for each case: a. Unit cost of materials, labor, and factory overhead for the month b. Cost of the units finished and transferred during the month c. Cost of the units in process at the end of the month
Freeman Furnishings has summarized its data as shown. Direct labor hours will be used as the activity base to allocate overhead: Compute the cost of goods manufactured.
A new company started production. Job 10 was completed, and Job 20 remains in production. Here is the information from job cost sheets from their first and only jobs so far: Using the information provided. A. What is the balance in work in process? B. What Is the balance in the finished goods inventory? C. If manufacturing overhead is applied on the basis of direct labor hours, what is the predetermined overhead rate?
A company calculated the predetermined overhead based on an estimated overhead of $70.000, and the activity for the cost driver was estimated as 2,500 hours. If product A utilized 1,350 hours and product 8 utilized 1,100 hours, what was the total amount of overhead assigned to the products? A. $35000 B. $30.800 C. $37,800 D. $68,600
Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 70,000. b. Requisitioned raw materials to production, 70,000. c. Distributed direct labor costs, 15,000. d. Factory overhead costs incurred, 45,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 195,000, on account. (Hint: Use a single account for raw materials and work in process.)
Cushing, Inc., costs products using a normal costing system. The following data are available for last year: Overhead is applied on the basis of direct labor hours. What was last years per unit product cost? a. 1.39 b. 4.40 c. 4.43 d. 3.01
Amounts for materials Big Timber Furniture Company manufactures furniture. Big Timber Furniture uses a job order cost system. Balances on June 1 from the materials ledger are as follows: The materials purchased during June are summarized from the receiving reports as follows: Materials were requisitioned to individual jobs as follows: The glue is not a significant cost, so it is treated as indirect materials (factory overhead). a.Determine the total purchase of materials in June. b.Determine the amounts of materials transferred to Work in Process and Factory Overhead during June. c.Determine the June 30 balances that would be shown in the materials ledger accounts.
A new company started production. Job 1 was completed, and Job 2 remains in production. Here is the information from the job cost sheets from their first and only jobs so far: Using the Information provided. A. What Is the balance in work in process? B. What Is the balance in finished goods inventory? C. If manufacturing overhead is applied on the basis of direct labor hours, what is the predetermined overhead rate?
Adam Inc.s records for May include the following information: A. What are Adams standard labor hours for the units made? B. What is Adams total standard labor cost for the units made?
Kenkel, Ltd. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 80,000. b. Requisitioned raw materials to production, 80,000. c. Distributed direct labor costs, 10,000. d. Factory overhead costs incurred, 60,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 225,000, on account.