figure 3-5 Ron Swanson Company makes wood flutes. The company controller wants t
ID: 2342535 • Letter: F
Question
figure 3-5
Ron Swanson Company makes wood flutes. The company controller wants to calculate the fixed and variable costs associated with the finishing costs incurred in the factory.
Date for the past four months were collected.
Month - Finishing costs - Machine hours
January - $15000 - 600
February- 9750 - 250
March - 9700 - 300
April - 14800 - 580
1) Refer to figure 3-5. What would Ron Swanson Company's estimate of total finishing cost be at a level of 400 machine hours?
2) Refer ro figure 3-5. Using the high-low method caculate the fixed cost of the finishing services
Explanation / Answer
Activity Cost Highest level 600 15000 Lowest level 250 9750 Difference 350 5250 Variable cost per machine hour 15 (5250/350) Fixed cost = 15000-(600*15) 6000 For activity level 400 hours Variable cost 6000 (400*15) Fixed cost 6000 Total cost 12000
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