EBK ACCOUNTING PRINCIPLES
13th Edition
ISBN: 9781119411017
Author: Weygandt
Publisher: WILEY
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Chapter 22, Problem 5BE
To determine
Introduction: The mixed costs are classified into fixed and variable costs by considering total costs incurred at the high and low activity levels. The difference between high and low-cost levels is characterized as variable costs because the variable cost element varies with variation in the level of activity.
To calculate: The variable and fixed cost elements using the high low method.
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The controller of the Blade Company wants you to estimate a cost function from the following two observations in a general ledger account called Maintenance:
(Click to view the information.)
Required
1. Estimate the cost function for maintenance.
2. Can the constant in the cost function be used as an estimate of fixed maintenance cost per month? Explain.
Requirement 1. Estimate the cost function for maintenance. (Round your answers to the nearest cent as needed.)
Maintenance costs =
Maintenance costs =
+(
+(
X
X
Requirement 2. Can the constant in the cost function be used as an estimate of fixed maintenance cost per month? Explain.
the relevant range, not at cost levels
the relevant range. If there are no months with zero
The cost function in requirement 1 is an estimate of how costs behave
machine-hours represented in the maintenance account, data in that account
function provides the best available starting point for a straight line that approximates how a cost behaves
be used to…
Deidoro Company has provided the following data for maintenance cost:
Machine hours
Maintenance cost
Multiple Choice
Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to: (Round
your intermediate calculations to 2 decimal places.)
O
O
Prior Year
17,100
20,100
$ 29,400 $ 34,200
$29,400 per year; $1.701 per machine hour
Current
Year
$2,040 per year; $1.701 per machine hour
$2,040 per year; $1.600 per machine hour
$29,400 per year; $1.600 per machine hour
Markowis Corp. has collected the following data concerning its maintenance costs for the past 6 months.July
August
September
October
November
DecemberUnits Produced18,000 32,000 36,000 22,000 40,000 38,000Total Cost$36,000 48,000 55,000 38,000 74,500 62,000Compute the variable- and fixed-cost elements using the high-low method.
Chapter 22 Solutions
EBK ACCOUNTING PRINCIPLES
Ch. 22 - Prob. 1QCh. 22 - Prob. 2QCh. 22 - Prob. 3QCh. 22 - Prob. 4QCh. 22 - Prob. 5QCh. 22 - Prob. 6QCh. 22 - Prob. 7QCh. 22 - Prob. 8QCh. 22 - 9. “Cost-volume-profit (CVP) analysis is based...Ch. 22 - Prob. 10Q
Ch. 22 - Prob. 11QCh. 22 - Prob. 12QCh. 22 - Prob. 13QCh. 22 - Prob. 14QCh. 22 - Prob. 15QCh. 22 - Prob. 16QCh. 22 - Prob. 17QCh. 22 - Prob. 20QCh. 22 - Prob. 1BECh. 22 - Prob. 2BECh. 22 - Prob. 3BECh. 22 - Prob. 4BECh. 22 - Prob. 5BECh. 22 - Prob. 6BECh. 22 - Prob. 7BECh. 22 - Prob. 8BECh. 22 - Prob. 9BECh. 22 - Prob. 10BECh. 22 - Prob. 11BECh. 22 - Prob. 12BECh. 22 - Prob. 13BECh. 22 - Prob. 1DIECh. 22 - Prob. 2DIECh. 22 - DO IT! 22-3 Cedar Grove Industries produces and...Ch. 22 - Prob. 4DIECh. 22 - Prob. 5DIECh. 22 - Prob. 1ECh. 22 - E22-2 The controller of Norton Industries has...Ch. 22 - Prob. 4ECh. 22 - Prob. 5ECh. 22 - Prob. 6ECh. 22 - Prob. 7ECh. 22 - Prob. 12ECh. 22 - Prob. 13ECh. 22 - Prob. 14ECh. 22 - Prob. 15ECh. 22 - Prob. 16ECh. 22 - Prob. 17ECh. 22 - Prob. 1PSACh. 22 - Prob. 2PSACh. 22 - Prob. 3PSACh. 22 - Prob. 4PSACh. 22 - Prob. 5PSACh. 22 - Prob. 6PSACh. 22 - Prob. 7PSACh. 22 - BYP22-1 Creative Ideas Company has decided to...Ch. 22 - Prob. 5EYCT
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- Company, which uses the high-low method to analyze cost behavior, has determined that machine hours best predict the company's total utilities cost. The company's cost and machine hour usage data for the first six months of the year follow:arrow_forwardBased on analyzing the relationship of total factory overhead (Y) to direct labor hours (X). The following relationship was found: Y = $1,000 + $2X The equation was probably found through the use of which of the following mathematical techniques?arrow_forwardThe Gangwere Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Gangwere Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. Month Cost Hours January $44,900 3,500 February 24,400 2,000 March 31,280 2,450 April 36,400 3,000 May 44,160 3,900 June 42,400 3,740How is the cost function stated? Question 12 options: a) y = $3,600 + $10.40X b) y = $10,112 + $8.64X c) y = $26,672 + $1.84X d) y = $21,360 + $10.40arrow_forward
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