The following information is available regarding the total manufacturing overhea
ID: 2366916 • Letter: T
Question
The following information is available regarding the total manufacturing overhead of Bursa Mfg. Co. for a recent four-month period: Machine-Hours Manufacturing Overhead Jan. 6,000 $ 310,000 Feb. 3,200 224,000 Mar. 4,900 263,800 Apr. 2,600 190,000 a-1 Use the high-low method to determine the variable element of manufacturing overhead costs per machine-hour. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Manufacturing overhead cost $ per machine hour a-2 Use the high-low method to determine the fixed element of monthly overhead cost. (Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.) Fixed element of manufacturing overhead $ b. Bursa expects machine-hours in May to equal 5,300. Use the cost relationships determined in part a to forecast May's manufacturing overhead costs. (Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.) Estimated manufacturing overhead $ c. Suppose Bursa had used the cost relationships determined in part a to estimate the total manufacturing overhead expected for the months of February and March. By what amounts would Bursa have over- or underestimated these costs? (Negative amounts should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.) Amount over (under) estimated February $ March $Explanation / Answer
Exercise 20.2: High-Low Method of Cost Analysis L.O. 1, 9
The following information is available regarding the total manufacturing overhead of Bursa Mfg. Co. for a recent four-month period:
Machine-Hours
Manufacturing Overhead
Jan.
5,500
$311,500
Feb.
3,200
224,000
Mar.
4,900
263,800
Apr.
2,800
184,600
Ex. 20.2
a.
(1)
Machine Hours
Manufacturing Overhead
High point
5500
$ 311500
Low point
2800
184600
Changes
2700
$ 126900
Thus, the estimated variable element of Bursa Mfg. Co.
Exercise 20.2: High-Low Method of Cost Analysis L.O. 1, 9
The following information is available regarding the total manufacturing overhead of Bursa Mfg. Co. for a recent four-month period:
Machine-Hours
Manufacturing Overhead
Jan.
5,500
$311,500
Feb.
3,200
224,000
Mar.
4,900
263,800
Apr.
2,800
184,600
- Use the high-low method to determine:
- The variable element of manufacturing overhead costs per machine-hour.
- The fixed element of monthly overhead cost.
- Bursa expects machine-hours in May to equal 5,300. Use the cost relationships determined in part a to forecast May's manufacturing overhead costs.
- Suppose Bursa had used the cost relationships determined in part a to estimate the total manufacturing overhead expected for the months of February and March. By what amounts would Bursa have over- or underestimated these costs?
Ex. 20.2
a.
(1)
Machine Hours
Manufacturing Overhead
High point
5500
$ 311500
Low point
2800
184600
Changes
2700
$ 126900
Thus, the estimated variable element of Bursa Mfg. Co.
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