****PLEASE SHOW YOUR WORK AS HOW YOU CAME TO THE SOLUTION, THANK YOU**** The fol

Question

****PLEASE SHOW YOUR WORK AS HOW YOU CAME TO THE SOLUTION, THANK YOU****

The following information is available regarding the total manufacturing overhead of Bursa Mfg. Co. for a recent four-month period:

   

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.)

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.)

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.)

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.)

Machine-Hours Manufacturing Overhead    Jan. 5,600      $ 310,000         Feb. 3,200      224,000         Mar. 4,900      263,800         Apr. 2,500      180,000     

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Variable Element = (310000 - 180000)/(5600 - 2500) = 41.94 per machine hour

Part A-2

Fixed Element = 310000 - 5600*41.94 = 75136

Part B

Estimated Manufacturing Overhead = 75136 + 41.94*5300 = 297418

Part D:

February (Based on A) = 75136 + 41.94*3200 = 209344

Actual Overhead for February = 224000

Understimation for February = 224000 - 209344 = -14656

March (Based on A) = 75136 + 41.94*4900 = 280642

Actual Overhead for February = 263800

Overestimation for March = 280642 - 263800 = 16842

Thanks.

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