Harrison, Inc. is preparing their budget for the upcoming year and requires a breakdown of thecosts of power used in its factory into the fixed and variable components. They have determinedthe number of direct labor hours worked affects the cost of power. The following data on the costof power used and direct labor hours worked are available for the last six months of this year:MonthJulyAugustSeptemberOctoberHigh-Low MethodNovemberDecemberTotalCost of Power$ 14,85015,40016,37019,80017,60018,500$102.520Direct Labor Hours3,0002,0502,9003,6502,6702,65016.9201. Assuming that Harrison uses the high-low method of analysis, calculate the cost function to beused to estimate the power costs.2. They have determined that production needs will require 8,467 direct labor hours. Using thecost function calculated above, what is the estimated cost of power?

It is a technique used in the accounting to bifurcate the total cost into fixed cost and variable…

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 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?

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 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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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