FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Harrison, Inc. is preparing their budget for the upcoming year and requires a breakdown of the
costs of power used in its factory into the fixed and variable components. They have determined
the number of direct labor hours worked affects the cost of power. The following data on the cost
of power used and direct labor hours worked are available for the last six months of this year:
Month
July
August
September
October
High-Low Method
November
December
Total
Cost of Power
$ 14,850
15,400
16,370
19,800
17,600
18,500
$102.520
Direct Labor Hours
3,000
2,050
2,900
3,650
2,670
2,650
16.920
1. Assuming that Harrison uses the high-low method of analysis, calculate the cost function to be
used to estimate the power costs.
2. They have determined that production needs will require 8,467 direct labor hours. Using the
cost function calculated above, what is the estimated cost of power?
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Transcribed Image Text:Harrison, Inc. is preparing their budget for the upcoming year and requires a breakdown of the costs of power used in its factory into the fixed and variable components. They have determined the number of direct labor hours worked affects the cost of power. The following data on the cost of power used and direct labor hours worked are available for the last six months of this year: Month July August September October High-Low Method November December Total Cost of Power $ 14,850 15,400 16,370 19,800 17,600 18,500 $102.520 Direct Labor Hours 3,000 2,050 2,900 3,650 2,670 2,650 16.920 1. Assuming that Harrison uses the high-low method of analysis, calculate the cost function to be used to estimate the power costs. 2. They have determined that production needs will require 8,467 direct labor hours. Using the cost function calculated above, what is the estimated cost of power?
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