Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to thenumber of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are givenbelow:Machine-hoursTotal factory overhead costsIndirect materials (variable)Rent (fixed)Maintenance (mixed)Total factory overhead costsThe factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the60,500 machine-hours level of activity as follows:Maintenance cost$ 8,561,500Y=Level of ActivityLowFor planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements.Required:1. Estimate how much of the factory overhead cost of $38,139,000 at the high level of activity consists of maintenance cost.60,500$34,179,000XTotal factory overhead costsHigh80,500$38, 139,000$ 9,377,50017,100,0007,701,500$34,179,0002. Using the high-low method, estimate a cost formula for maintenance.3. What total overhead costs would you expect the company to incur at an operating level of 65,500 machine-hours?

The costs incurred for the production are classified as fixed and variable costs. The high low…

Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 60,500 machine-hours level of activity as follows: Maintenance cost Level of Activity Low 60,500 $34,179,000 For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $38,139,000 at the high level of activity consists of maintenance cost. $ 8,561,500 Y= High 80,500 $38,139,000 $ 9,377,500 17,100,000 7,701,500 $34,179,000 X 2. Using the high-low method, estimate a cost formula for maintenance. 3. What total overhead costs would you expect the company to incur at an operating level of 65,500 machine-hours?

Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 60,500 machine-hours level of activity as follows: Maintenance cost Level of Activity Low 60,500 $34,179,000 For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $38,139,000 at the high level of activity consists of maintenance cost. $ 8,561,500 Y= High 80,500 $38,139,000 $ 9,377,500 17,100,000 7,701,500 $34,179,000 X 2. Using the high-low method, estimate a cost formula for maintenance. 3. What total overhead costs would you expect the company to incur at an operating level of 65,500 machine-hours?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 11E: Ripley, Inc., costs products using a normal costing system. The following data are available for...

See similar textbooks

Similar questions

Ripley, Inc., costs products using a normal costing system. The following data are available for last year: Overhead is applied on the basis of direct labor hours. Required: 1. What was the predetermined overhead rate? 2. What was the applied overhead for last year? 3. Was overhead over- or underapplied, and by how much? 4. What was the total cost per unit produced (carry your answer to four significant digits)?
Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs The factory overhead costs above consist of Indirect materials, rent, and maintenance. The company has analyzed these costs at the 61,000 machine-hours level of activity as follows: Maintenance cost Level of Activity Low 61,000 $30,491,000 Y= For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $34,611,000 at the high level of activity consists of maintenance cost. High $ 8,540,000 14,800,000 7,151,000 $30,491,000 X Total factory overhead costs 81,000…
Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 62,200 machine-hours level of activity as follows: Level of Activity Low 62,200 $36, 159, 600 Maintenance cost For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $40,519,600 at the high level of activity consists of maintenance cost. Y = + High 82, 200 $40,519,600 $ 22,600,000 $ 9,019,000 18,100,000 9,040,600 $36, 159, 600 2.…
Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Direct Labor Hours 50,000 75,000 Total Factory Overhead Cost 16,250,000 20,000,000 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 50,000-hour level of activity as follows: Indirect Materials (Variable) 5,000,000 Rent (Fixed) 8,000,000 Maintenance (Mixed) 3,250,000 Total Factory overheads Cost 16,250,000 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements Required: 1. Estimate how much of the 20,000,000 factory overhead cost at the high level of activity consists of maintenance cost.…
Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Direct Labor Hours 61,000 Total Factory Overhead Cost 16,625,000 14,000,000 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 61000 hour level of activity as follows: Indirect Materials (Variable) Rent (Fixed) Maintenance (Mixed) 1,998,000 Total Factory overheads Cost 14,000,000 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements 90,000 5,002,000 7,000,000 Required: 1. Estimate how much of the $16,625,000 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it…
National Co. produces small electric engines. It incurs the following costs for the year. Which of the following costs is not a variable product cost? Wages of the assembly-line workers Machine lubricant used in production activities Commissions paid to salespeople Engine casings used in production activities
Roper Furniture manufactures office furniture and tracks cost data across their process. The following are some of the costs that they incur. Classify these costs as fixed or variable costs, and as product costs or period costs. A. Wood used to produce desks ($125.00 per desk) B. Production labor used to produce desks ($15 per hour) C. Production supervisor salary ($45,000 per year) D. Depreciation on factory equipment ($60,000 per year) E. Selling and administrative expenses ($45,000 per year) F. Rent on corporate office ($44,000 per year) G. Nails, glue, and other materials required to produce desks (varies per desk) H. Utilities expenses for production facility I. Sales staff commission (5% of gross sales)
Pavilion Company is using the high-low method to determine the fixed and variable components of its utilities expense, a semivariable cost. Pavilion Company believes direct labor hours is the best activity to measure the cost. In its low month, there were 1,600 direct labor hours and utilities expense was $8,000. In its high month, there were 3,600 direct labor hours and utilities expense was $12,000. Using the high-low method, what is the fixed cost per month, rounded to the nearest whole dollar? $0 $9,231 $4,000 $4,800
Northridge, Inc., uses the high-low method to analyze cost behavior. The company observed that at 20,000 machine hours of activity, total maintenance costs averaged $10.50 per hour. When activity jumped to 24,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $9.75. On the basis of this information, the company's fixed maintenance costs were
Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company's utilities cost. The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,200 machine hours, with the following data being available for the first six months of the year: Month Utilities Machine Hours January 9,600 890 February 9,260 810 March 9,850 900 April 10,260 1,010 May 10,732 1,040 June 10,050 990 The fixed utilities cost per month for Barkoff is: Multiple Choice $3,440. $4,076. $4,436. • $4,776. None of the answers is correct
The Macon Company uses the high-low method to determine its cost equation. The following information was gathered for the past year: Machine Hours Direct Labor Costs Busiest month (June) 17,500 $ 229,022 Slowest month (December) 10,200 $ 155,000 If Macon expects to use 13,500 machine hours next month, what are the estimated direct labor costs?
Younes Incorporated manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as P06. Data concerning this product are given below: Per Unit $ 220 $ 38 Selling price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling and administrative expense The above per unit data are based on annual production of 4,000 units of the component. Assume that direct labor is a variable cost. What is the current contribution margin per unit for component P06 based on its selling price of $220 and its annual production of 4,000 units? $ 1 $ 8 $ 16 $ 4 $16