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    Cost Accounting

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    I need help with these 2 problems. Thanks.

    Moore Company needs to determine the variable utilities rate per direct machine hour in order to estimate cost for August. Relevant information is as follows.

    Month Machine Hours Worked Utilities
    April 4,800 $4,144
    May 5,200 4,300
    June 5,600 4,482
    July 6,000 4,804

    Moore anticipates producing 3,800 units in August, with each unit requiring 1.5 hours of machine time. The company uses the high-low method to analyze costs.

    A. Calculate the variable and fixed components of the utilities cost.
    B. Using the data calculated above, estimate the utilities cost for August.
    C. Compare the high-low method versus the visual-fit method with respect to (1) number of data observations used in the analysis and (2) objectivity of the results.

    Hampton Company had the following inventory balances at the beginning and end of the year:

    January 1 December 31
    Raw material $ 50,000 $ 35,000
    Work in process 130,000 170,000
    Finished goods 280,000 255,000

    During the year, the company purchased $100,000 of raw material and spent $340,000 on direct labor. Other data: manufacturing overhead incurred, $450,000; sales, $1,560,000; selling and administrative expenses, $90,000; income tax rate, 30%.

    A. Calculate cost of goods manufactured.
    B. Calculate cost of goods sold.
    C. Determine Hampton's net income.

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    Solution Preview

    A. Calculate the variable and fixed components of the utilities cost.

    Using the high low method. We find the difference between the highest and lowest values.
    Highest cost = 4,804 and lowest cost = 4,144 difference = 660
    Highest hours = 6,000 and lowest hours = 4,800 difference = 1,200
    Since fixed cost is constant, the change in cost would be due to variable cost
    Variable ...

    Solution Summary

    The solution has two questions - one relating to finding the variable cost per unit and the second relating to calculation of cost of goods sold