a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost component of the mixed cost.
a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost component of the mixed cost.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
P6-4A | High-Low and Cost Formula | |||||||||||||
Harrison Company has accumulated the following total |
||||||||||||||
Low | High | |||||||||||||
Activity (direct labor hours) | 90,000 | 130,000 | ||||||||||||
Total manufacturing overhead | $484,000 | $628,000 | ||||||||||||
The total overhead cost includes variable, fixed, and mixed costs. At 130,000 direct labor hours, the total cost breakdown is as follows: | ||||||||||||||
Variable cost | $286,000 | |||||||||||||
Fixed cost | 85,000 | |||||||||||||
Semi-mixed cost | $257,000 | |||||||||||||
Required | ||||||||||||||
a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost component of the mixed cost. | ||||||||||||||
b. What should the total planned overhead cost be at 115,000 direct labor hours? |
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