Cost Estimation & High Low Method
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Question 1
A company which produces a range of products is facing two situations where decisions need to be made. The company's total budget production overhead s RM160000. The production overhead consists of both variable and fixed costs and it is calculated in the following proportion:
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Solution Summary
The solution provides example to determine for special order, make or buy decision and high low cost estimation method.
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Problem 1
Special Order Amount = 2000*16 = 32,000
Cost of Product X
Direct Material & Labor = 8+4 = 12
Variable production overhead = 40%*8 = $3.20
Total cost = 12+3.2 = 15.20
Total Cost for 2000 = 2000*15.20 = 30,400
Hence, yes as the company has additional ...
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