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# Total Overhead Cost - Management Accounting

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The production manager has provided you with the following information for varying levels of production:

Volume level in direct labor hours Total overhead cost
30,000 \$340,000
40,000 400,000
50,000 435,000
60,000 477,000
70,000 ?
80,000 587,000
90,000 636,400

What is the total overhead cost at 70,000 direct labor hours?

a. \$479,233
b. \$522,667
c. \$530,133
d. \$532,000
e. \$537,600

#### Solution Preview

By using high low method we have,

Variable Cost per ...

#### Solution Summary

The solution total overhead cost when varying levels of production are given. Management accounting for total overhead costs are provided.

\$2.19

## Managerial Accounting (ABC Company)

ABC Company's total overhead costs at various levels of activity are presented below:

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

V = Variable; F = Fixed; M = Mixed

The company wants to break down the maintenance cost into its basic variable and fixed cost elements.

Required:

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)