MANAGERIAL ACCOUNTING <CUSTOM>
16th Edition
ISBN: 9781307054774
Author: Garrison
Publisher: MCG CUSTOM
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Textbook Question
Chapter 5.A, Problem 8P
Problem 5A-8 High-Low Method; Predicting Cost LO5-10
Nova Company's total overhead cost at various levels of activity is presented below:
| Month | Machine | Total | |||
| Hours | Overhead | ||||
| Cost | |||||
| April | 70,000 | $198,000 | |||
| May | 60,000 | $174,000 | |||
| June | 80,000 | 222,000 | |||
| July | 90,000 | 246,000 |
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:
| Utilities (Variable) | $48,000 | |||
| Supervisory salaries (fixed) | 21,000 | |||
| Maintenance (mixed) | 105,000 | |||
| Total Overhead cost | $174,000 | |||
Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements.
Required:
| Estimate how much of die $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 Y= a + bX. |
| Express the company's total overhead cost in the form Y= a + bX. |
| What total overhead cost would you expect to be incurred at an activity level of 75,000 machine-hours? |
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Nova Company's total overhead cost at various levels of activity are presented below
Total
Overhead
Machine-
Month
Hours
Cost
April
May
June
52,000
42,000
62,000
72,000
$203,860
$181,060
$226,660
$249,460
July
Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at
the 42,000 machine-hour level of activity is:
Utilities (variable)
Supervisory salaries (fixed)
Maintenance (mixed)
Total overhead cost
S
50,400
67,000
63.660
181,060
Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements
Required:
1. Estimate how much of the $249,460 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first
determine how much of the $249,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!)
(Do not round intermediate calculations.)
Maintenance cost in July
2. Using the high-low method,…
PROBLEM I
ABC Company's total overhead costs at various levels of activity are presented below:
March
April
May
June.
Machine Hours Total Overhead Costs
$216,800
$194,000
$239,600
$262,400
60,000
50,000
70,000
80,000
Assume that the overhead costs above consist of utilities, supervisory salaries, and
maintenance. At the 50,000 machine-hour level of activity these costs are:
Utilities (V).
Supervisory salaries (F).
Maintenance (M)..
Total overhead cost
V = Variable; F = Fixed; M = Mixed
The company wants to break down the maintenance cost into its basic variable and fixed
cost elements.
Required:
$ 54,000
62,000
78.000
$194.000
a. Estimate the maintenance cost for June.
b.
Use the high-low method to estimate the cost formula for maintenance cost.
c. Estimate the total overhead cost at an activity level of 55,000 machine hours.
Question 6:
Your company currently produces a range of three products, D, E, and F to which the following details relate for Period 2.
D E F
Production (units) 1,500 2,500 14,000
Material cost per unit
Br. 18
Br. 10
Br. 20
Labor hours per unit
1
3
2
Machine hours per unit
3
2
6
Labor costs are Br. 8 per hour and production overheads are currently absorbed in the conventional system by reference to machine hours. Total production overheads for Period 2 have been analyzed as follows:
Set-up cost 327,250
Handling cost 187,000
Machine cost 140,250
Inspection cost 280,500
935,000
Calculate the cost per unit for each product using conventional
The introduction of an ABC is being considered and to that end the following volume…
Chapter 5 Solutions
MANAGERIAL ACCOUNTING <CUSTOM>
Ch. 5.A - EXERCISE 5A-1 High-Low Method LO5-10 The Cheyenne...Ch. 5.A - EXERCISE 5A-2 Least-Squares Regression LO5-11...Ch. 5.A - EXERCISE 5A-3 Cost Behavior; High-Low Method...Ch. 5.A - Prob. 4ECh. 5.A - EXERCISE 5A-5 Least-Squares Regression LO5-11...Ch. 5.A - Prob. 6PCh. 5.A - Problem 5A-7 Cost Behavior; High-Low Method;...Ch. 5.A - Problem 5A-8 High-Low Method; Predicting Cost...Ch. 5.A - Prob. 9PCh. 5.A - Prob. 10P
Ch. 5.A - Case 5A-11 Mixed Cost Analysis and the Relevant...Ch. 5.A - CASE 5A-12 Analysis of Mixed Costs in a Pricing...Ch. 5 - Prob. 1QCh. 5 - Often the most direct route to a business decision...Ch. 5 - Prob. 3QCh. 5 - What is the meaning of operating leverage?Ch. 5 - What is the meaning of break-even point?Ch. 5 - 5-6 In response to a request from your immediate...Ch. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 1AECh. 5 - Prob. 2AECh. 5 - Prob. 3AECh. 5 - Prob. 4AECh. 5 - Prob. 5AECh. 5 - Prob. 1F15Ch. 5 - Prob. 2F15Ch. 5 - Prob. 3F15Ch. 5 - Prob. 4F15Ch. 5 - Prob. 5F15Ch. 5 - Prob. 6F15Ch. 5 - Prob. 7F15Ch. 5 - Prob. 8F15Ch. 5 - Prob. 9F15Ch. 5 - Prob. 10F15Ch. 5 - Prob. 11F15Ch. 5 - Prob. 12F15Ch. 5 - Prob. 13F15Ch. 5 - Prob. 14F15Ch. 5 - Prob. 15F15Ch. 5 - Prob. 1ECh. 5 - Prob. 2ECh. 5 - Prob. 3ECh. 5 - Prob. 4ECh. 5 - Prob. 5ECh. 5 - Prob. 6ECh. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - EXERCISE 5-10 Multiproduct Break-Even Analysis...Ch. 5 - Prob. 11ECh. 5 - EXERCISE 5-12 Multiproduct Break-Even Analysis...Ch. 5 - EXERCISE 5-13 Changes in Selling Price, Sales...Ch. 5 - Prob. 14ECh. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Prob. 19PCh. 5 - PROBLEM 5-20 CVP Applications: Break-Even...Ch. 5 - PROBLEM 5-21 Sales Mix; Multiproduct Break-Even...Ch. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 -
PROBLEM 5-25 Changes in Fixed and Variable Costs;...Ch. 5 -
PROBLEM 5-26 CVP Applications; Break-Even...Ch. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 -
PROBLEM 5-31 Interpretive Questions on the CVP...Ch. 5 -
CASE 5-32 Break-Even Analysis for Individual...Ch. 5 - Prob. 33C
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