MANAGERIAL ACCT.F/MANAGERS>CUSTOM<
4th Edition
ISBN: 9781307090147
Author: Noreen
Publisher: MCG/CREATE
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Textbook Question
Chapter 2, Problem 2.20P
High-Low Method; Predicting Cost [LO 2-4, LO 2-5]
Nova Company' s total
![Chapter 2, Problem 2.20P, High-Low Method; Predicting Cost [LO 2-4, LO 2-5] Nova Company' s total overhead cost at various , example 1](http://dev-ingestion-image-output.s3-website-us-east-1.amazonaws.com/9781259578540/Chapter-2/images/html_q_78540-2-2.20p_1.png)
Assume that the total overhead cost above consists of utilities, supervisory salaries. and maintenance. The breakdown of these costs at the machine-hour level of activity is:
![Chapter 2, Problem 2.20P, High-Low Method; Predicting Cost [LO 2-4, LO 2-5] Nova Company' s total overhead cost at various , example 2](http://dev-ingestion-image-output.s3-website-us-east-1.amazonaws.com/9781259578540/Chapter-2/images/html_q_78540-2-2.20p_2.png)
Nova Company’s management wants to break down the maintenance cost into its variable and fixed cost elements.
Required:
- Estimate how much of the $246,000 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $246,000 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!)
- Using the high-low method: estimate a cost formula for maintenance.
- Express the company' s total overhead cost in the linear equation form
- What total overhead cost would you expect to be incurred at an activity level of 75,000 machine-hours?
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Hilby, Inc., uses the high-low method to analyze cost behavior. The company observed that at 12,000 machine hours of activity, total maintenance costs averaged P7.00 per hour. When activity jumped to 15,000 machine hours, which was still within the relevant range, the average cost per machine hour totaled P6.40. On the basis of this information, the variable cost per machine hour was:
a. P4.00.b. P6.40.c. P6.70.d. P7.00.
The management of Hamano Corporation would like for you to analyze their repair costs, which are listed below:
Machine-Hours Repair Costs
April 2,148 $ 33,102
May 2,177 $ 33,120
June 2,134 $ 33,097
July 2,214 $ 33,120
August 2,119 $ 33,030
September 2,230 $ 33,184
October 2,145 $ 33,071
November 2,225 $ 33,157
Management believes that repair cost is a mixed cost that depends on the number of machine-hours. Using the least-squares regression method, the estimates of the variable and fixed components of repair cost would be closest to:
Multiple Choice
$1.25 per machine-hour plus $30,387 per month
$0.80 per machine-hour plus $31,953 per month
$0.98 per machine-hour plus $30,978 per month
15.00 per machine-hour plus $33,917 per month
Please Solve this MCQs
Pedregon Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
7.35
Direct labor
$
4.30
Variable manufacturing overhead
$
1.60
Fixed manufacturing overhead
$
26,000
Sales commissions
$
0.80
Variable administrative expense
$
0.90
Fixed selling and administrative expense
$
6000
If the selling price is $22.10 per unit, the contribution margin per unit sold is closest to:
$4.85
$3.15
$10.45
$7.15
Chapter 2 Solutions
MANAGERIAL ACCT.F/MANAGERS>CUSTOM<
Ch. 2 - Prob. 2.1QCh. 2 - Prob. 2.2QCh. 2 - Prob. 2.3QCh. 2 - Prob. 2.4QCh. 2 - Prob. 2.5QCh. 2 - Prob. 2.6QCh. 2 - Prob. 2.7QCh. 2 - Prob. 2.8QCh. 2 - Prob. 2.9QCh. 2 - Prob. 2.10Q
Ch. 2 - Prob. 2.11QCh. 2 - Give the general formula for a mixed cost. Which...Ch. 2 - What is meant by the term least-squares...Ch. 2 - Prob. 2.14QCh. 2 - Prob. 2.15QCh. 2 - Prob. 2.16QCh. 2 - Prob. 2.17QCh. 2 - Prob. 1AECh. 2 - Prob. 1TF15Ch. 2 - Prob. 2.1ECh. 2 - Prob. 2.2ECh. 2 - Prob. 2.3ECh. 2 - Prob. 2.4ECh. 2 - High-Low Method (LO 2-5) The Cheyenne Hotel in Big...Ch. 2 - Prob. 2.6ECh. 2 - Prob. 2.7ECh. 2 - Cost Behavior; High-Low Method [LO 2-4, LO 2-5]...Ch. 2 - Cost Terminology for Manufacturers [LO 2-2, LO...Ch. 2 - Prob. 2.10ECh. 2 - Prob. 2.12ECh. 2 - Prob. 2.13ECh. 2 - Prob. 2.15ECh. 2 - Cost Behavior; High-Low Method; Contribution...Ch. 2 - High-Low Method; Predicting Cost [LO 2-4, LO 2-5]...Ch. 2 - Prob. 2.18PCh. 2 - Prob. 2.19PCh. 2 - High-Low Method; Predicting Cost [LO 2-4, LO 2-5]...Ch. 2 - Prob. 2.21PCh. 2 - High-Low Method; Contribution Format Income...Ch. 2 - Scattergraph Analysis; Selection of an Activity...
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