MANAGERIAL ACCOUNTING F/MGRS.
5th Edition
ISBN: 9781259969485
Author: Noreen
Publisher: RENT MCG
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Chapter 2A, Problem 2A.8P
High-Low Method; Predicting Cost LO2—10
Nova Company’s total
Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 60,000 machine-hour level of activity is:
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 in the form
- Express the company’s total overhead cost in the form
- What total overhead cost would you expect to be incurred at an activity level of 75,000 machine-hours?
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Students have asked these similar questions
16. Platinum Corporation gathered the ff. data for its maintenance costs: Units produced 100,000 90,000 106,000
Total costs 1,300,000 1,500,000 1,750,000 Using high-low method,
what is the variable cost per unit?
2. Model C-V-UA company has the following data about its costs:
Variable unit cost:Raw material $2.3Labor $1.2Variable GIF $0.6Fixed monthly costs:GIF $7,500
Depreciation $4,500Salaries $ 36,500Rent $3,700Utilities $ 900
The unit sale price is $12 and sales of 10,000 units are planned.Calculate the safety margin in percentage: __________________With the above data, it calculates the percentage contribution margin.
PROBLEM 2
Elsa, Inc., has only variable costs and fixed costs. A review of the company's records disclosed
that when 100,000 units were produced, fixed manufacturing costs amounted to $200,000 and
the cost per unit manufactured totaled $5. On the basis of this information, how much cost
would the firm anticipate at an activity level of 97,000 units?
A. $485,000.
B. $491,000.
C. $494,000.
D. $500,000.
Chapter 2A Solutions
MANAGERIAL ACCOUNTING F/MGRS.
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