The production manager has provided you with the following information for varying levels of production:
Volume level in direct labor hours Total overhead cost
What is the total overhead cost at 70,000 direct labor hours?
The answer is 'e'
By using high low method we have,
Variable Cost per ...
The solution total overhead cost when varying levels of production are given. Management accounting for total overhead costs are provided.
Managerial Accounting (ABC Company)
ABC Company's total overhead costs at various levels of activity are presented below:
Machine Hours Total Overhead Costs
March 60,000 $216,800
April 50,000 $194,000
May 70,000 $239,600
June 80,000 $262,400
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) $ 54,000
Supervisory salaries (F) 62,000
Maintenance (M) 78,000
Total overhead cost $194,000
V = Variable; F = Fixed; M = Mixed
The company wants to break down the maintenance cost into its basic variable and fixed cost elements.
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. (Note that Part C is asking about total overhead cost and not just maintenance cost)
****** Carefully label each part of your answer.View Full Posting Details