Financial and Managerial Accounting (Looseleaf) (Custom Package)
6th Edition
ISBN: 9781259754883
Author: Wild
Publisher: MCG
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Chapter 18, Problem 3QS
Cost behavior estimation---high-low method P1
The following information is available for a company’s maintenance cost over the last seven months. Using the high-low method. Estimate both fixed and variable components of its maintenance cost.
| Month | Maintenance Hours | Maintenance Cost |
| June…………………………………… | 9 | $5,450 |
| July…………………………………… | 18 | 6,900 |
| August………………………………... | 12 | 5,100 |
| September……………………………... | 15 | 6,000 |
| October………………………………... | 21 | 6,900 |
| November……………………………… | 24 | 8,100 |
| December……………………………… | 6 | 3,600 |
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The following information is available for a company's maintenance cost over the last seven months.
*
Month
June
July
August
September
October
November
December
7,750
8,560
3,700
Using the high-low method, estimate both the fixed and variable components of its maintenance cost.
Units Produced
110
170
130
160
220
250
70
Total cost at the high point
Variable costs at the high point:
Volume at the high point:
Variable cost per unit produced
Total variable costs at the high point
Total fixed costs
#
Total cost at the low point
Variable costs at the low point:
Volume at the low point:
Variable cost per unit produced
Total variable costs at the low point
13
Change in cost
Change in volume
3
(4
$
IDI
4
15-
%
Maintenance Cost
$4,780
6,400
5,320
6,130
5
High-Low method - Calculation of variable cost per unit produced
Cost at high point minus cost at low point
Volume at high point minus volume at low point
16
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Q Search
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Problem 2
Java Company manufactures a product that is subject to wide seasonal
variations in demand. Unit costs are computed on a quarterly basis by dividing
each quarter's manufacturing costs (materials, labor, and overhead) by the
quarter's production in units. The company's estimated costs, by quarter, for
the coming year are given below:
Quarter
First
Second
Third
Fourth
Direct materials
Direct labor. ..
Manufacturing overhead. .
Total manufacturing costs....
P240,000 P120,000
96,000
228.000
P564,000
48,000
204.000
P372.000
P 60,000
24,000
192,000
P276,000
P180,000
72,000
216.000
P468,000
Number of units to be produced. .
Estimated cost per unit ...
80,000
P7.05
40,000
P9.30
20,000
P13.80
60,000
P7.80
Management finds the variation in unit costs to be confusing and difficult to
work with. It has been suggested that the problem lies with manufacturing
overhead, since it is the largest element of cost. Accordingly, you have been
asked to find a more suitable way of assigning…
Electronio ExperGecupancy Percentage
62
Month
January
April
August
6,200
6,600
68
7,200
78
December
5,500
50
Jsing the highllow two point method to:
1 Determine the variable cost per 1poercent of occupancy
2 Estimate the fixed costs per month
3 What is the estimated total electric expense at 62 pecent of ocoupancy?
ANSWER
Month
Electronic Expenses Oooupanoy Percentage
High
August
7,200
78
Low
December
5,500
50
Difference
1,700
28
1 Variable cost per 1% of ocoupanoy =
61
2 Total variable cost of electric expense for December =
Total fixed cost of electric expense for December =
3,035.71
2,464.29
Total variable cost of electric expense for August =
Total fixed cost of electrio expense for August =
4,735.71
2,464.29
3 Using the fixed cost for December as the total fixed cost for estimation
Total variable cost of electric expense at 62%. oooupancy =
Total fixed oost of electric expense at 62% occupanoy
Estimated total electric expense at 62% occupancy =
Chapter 18 Solutions
Financial and Managerial Accounting (Looseleaf) (Custom Package)
Ch. 18 - Prob. 1MCQCh. 18 - Prob. 2MCQCh. 18 - Prob. 3MCQCh. 18 - Prob. 4MCQCh. 18 - Prob. 5MCQCh. 18 - Prob. 1DQCh. 18 - Prob. 2DQCh. 18 - When output volume increases, do fixed costs per...Ch. 18 - How is the cost-volume-profit analysis useful?Ch. 18 - Prob. 5DQ
Ch. 18 - Prob. 6DQCh. 18 - Prob. 7DQCh. 18 - Prob. 8DQCh. 18 - Prob. 9DQCh. 18 - Prob. 10DQCh. 18 - Prob. 11DQCh. 18 - Prob. 12DQCh. 18 - Prob. 13DQCh. 18 - Prob. 14DQCh. 18 - Prob. 15DQCh. 18 - Prob. 16DQCh. 18 - Prob. 17DQCh. 18 - Prob. 18DQCh. 18 - Prob. 19DQCh. 18 - APPLE Should Apple use single product or...Ch. 18 - Prob. 21DQCh. 18 - Prob. 1QSCh. 18 - Prob. 2QSCh. 18 - Cost behavior estimation---high-low method P1 The...Ch. 18 - Prob. 4QSCh. 18 - Prob. 5QSCh. 18 - Prob. 6QSCh. 18 - Prob. 7QSCh. 18 - Prob. 8QSCh. 18 - Prob. 9QSCh. 18 - Prob. 10QSCh. 18 - Prob. 11QSCh. 18 - Prob. 12QSCh. 18 - Prob. 13QSCh. 18 - Prob. 14QSCh. 18 - Prob. 15QSCh. 18 - Prob. 16QSCh. 18 - Prob. 17QSCh. 18 - Following are five graphs representing various...Ch. 18 - Prob. 2ECh. 18 - Prob. 3ECh. 18 - Prob. 4ECh. 18 - Prob. 5ECh. 18 - Prob. 6ECh. 18 - Prob. 7ECh. 18 - Prob. 8ECh. 18 - Prob. 9ECh. 18 - Prob. 10ECh. 18 - Prob. 11ECh. 18 - Prob. 12ECh. 18 - Prob. 13ECh. 18 - Prob. 14ECh. 18 - Prob. 15ECh. 18 - Prob. 16ECh. 18 - Prob. 17ECh. 18 - Prob. 18ECh. 18 - Prob. 19ECh. 18 - Prob. 20ECh. 18 - Prob. 21ECh. 18 - Prob. 22ECh. 18 - Prob. 23ECh. 18 - Prob. 24ECh. 18 - Prob. 25ECh. 18 - Prob. 1PSACh. 18 - Prob. 2PSACh. 18 - Prob. 3PSACh. 18 - Prob. 4PSACh. 18 - Prob. 5PSACh. 18 - Prob. 6PSACh. 18 - Prob. 7PSACh. 18 - Prob. 1PSBCh. 18 - Prob. 2PSBCh. 18 - Prob. 3PSBCh. 18 - Prob. 4PSBCh. 18 - Prob. 5PSBCh. 18 - Prob. 6PSBCh. 18 - Prob. 7PSBCh. 18 - Prob. 18SPCh. 18 - Apple offers extended service contracts that...Ch. 18 - Prob. 2BTNCh. 18 - Prob. 3BTNCh. 18 - Prob. 4BTNCh. 18 - Prob. 5BTNCh. 18 - Prob. 6BTNCh. 18 - Prob. 7BTNCh. 18 - Prob. 8BTNCh. 18 - Prob. 9BTN
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