1.As any architect, Tasha is always drinking coffee. Unfortunately one morning s
ID: 2332810 • Letter: 1
Question
1.As any architect, Tasha is always drinking coffee. Unfortunately one morning she spilt some coffee on some of the records of Zube Co. She asked you, Aga, her longtime accountant friend to help her find the missing numbers:
Direct materials used
$19376
Direct labour costs
?
Manufacturing overhead
?
Total manufacturing costs
$105869
Work in process, beginning
$18159
Work in process, ending
$33671
Cost of goods manufactured
?
In addition, you were also provided the following information:
Indirect materials and labour
$26981
Depreciation on administrative office
$4998
Property taxes for administrative office
$15414
What are the direct labour costs incurred and cost of goods manufactured?
2.You are given the following data for Skylar Ltd.:
Direct Labour Hours
Overhead Costs
January
25700
$630800
February
32600
$700100
March
44819
$881656
April
37500
$720500
May
40400
$910300
June
21133
$620781
July
23700
$651000
August
39200
$759000
September
41837
$751248
October
24000
$615200
November
25200
$620100
December
30100
$654377
Using the high-low method, estimate the total overhead at a volume of 30,000 direct labour hours:
Select one:
a. $330417
b. $676657
c. $718441
d. $654377
Direct materials used
$19376
Direct labour costs
?
Manufacturing overhead
?
Total manufacturing costs
$105869
Work in process, beginning
$18159
Work in process, ending
$33671
Cost of goods manufactured
?
Explanation / Answer
Answer 1. Statement of Cost of Goods Manufactured Direct Material Used 19,376.00 Direct Labor Cost - $105,869 - ($19,376 + $26,981) 59,512.00 Manufacturing Overhead - Indirect Material & Labor 26,981.00 Total Manufacturing Costs 105,869.00 Add: WIP Inventory, Beginning 18,159.00 Sub-total 124,028.00 Less: WIP Inventory, Ending (33,671.00) Cost of Goods Manufactured 90,357.00 Answer 2-c. $718,441 Using the High Low Method - Overhead Costs DLH Overhead Cost Driver - Highest - March 44,819 881,656.00 Cost Driver - Lowest - June 21,133 620,781.00 Difference 23,686 260,875.00 Variable Cost = $260,875 / 23,686 DLH = $11.01 per DLH (Approx.) Fixed Cost = $881,656 - (44,819 DLH X $11.01) = $388,024.46 or say $388,024 (Approx.) Fixed Cost = $36,000 The linear equation as Per High Low Method - Overhead Costs Y = $388,024 + $11.01 X Overhead Cost of 30,000 DLH: Y = $388,024 + $11.01 X 30,000 DLH Y = $718,440.70 or say $718,441 (Approx.)
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