Homework: Chapter 6 Homework Score: 4.85 of 7 pts & P6-63A (similar to) Save 2 o
ID: 2341521 • Letter: H
Question
Homework: Chapter 6 Homework Score: 4.85 of 7 pts & P6-63A (similar to) Save 2 of 2 (2 complete) HW Score: 57.41%, 8.61 or 15 pts EQuestion Help Berg Industries is in the process of analyzing its manufacturing overhead costs. Management is not sure if the number produced or number of direct labor (DL) hours is the best cost driver to use for predicting manufacturing overhead Data Table Direct Labor Units Cost per MOH Cost per Month July August September....$ October Overhead Costs Hours Produced DL Hour Unit Produced 520,000 573,000 465,000 505,000 627,000 485,000 142.47 131.42 109.93 146.38 108.29 147.42 23,600 3,650 $ 7,000 ,360 $ 21,000 4,230 $ 22,100 3,450 33,000 5,790 $ 21,500 22.03 $ 21.22 S 22.14 S 22.85 S 19.00 $ 22.56 S 3,290 $ Requirement 4. Do the data appear to be sound or do you see any potential data problems? Explain There does not appear to be any outler in the graph depicting MOH costs vs. DL hours. In the graph of MOH costs data points are out of ine, management should check into this data before continuing with the analysis. Requirement 5. Use the high-low method to determine the company's manufacturing overhead cost equation using DL hours as the cost driver. Assume that management believes all data to be accurate and wants to include all of it in the analysis. (Round Print Done the the variable cost to the nearest cent) Enter any number in the edit fields and then click Check AnswerExplanation / Answer
Requirement 5
y = $13.50 x + $181500
Using the high-low method:
Variable cost per unit = $162000/12000 = $13.50
Fixed cost (at high level) = $627000 - (33000 x $13.50) = $627000 - $445500 = $181500
Fixed cost (at low level) = $465000 - (21000 x $13.50) = $465000 - $283500 = $181500
DL Hours Manufacturing Overhead Costs $ High activity level 33000 $627,000 Low activity level 21000 $465,000 Change 12000 $162,000Related Questions
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