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X Company wants to estimate overhead costs in March, when production is expected

ID: 2424274 • Letter: X

Question

X Company wants to estimate overhead costs in March, when production is expected to be 1,400 units. It used account analysis with the January cost information below to determine the parameters of the cost function. January production was 1,000 units.

What is X Company's estimate of total overhead costs in March [round intermediate unit costs to the nearest cent]?

Please Help and Explain!!! Thank you!

Total   Total Variable Utilities $40,100 $40,100       Maintenance 53,000 27,560       Supervision 23,000 0          

Explanation / Answer

Solution.

Calculation of overhead.

Total overhead = $145,284.

For 1,000 unit Particular Total Variable VariablePer unit Utilities                     40,100                     40,100                         40.10 Maintenance                     53,000                     27,560                         27.56 Supervision                     23,000                              -                                  -   Total                   116,100                     67,660                         67.66 For 1,400 unit Particular Total Variable Per unit Utilities                     56,140                     56,140                         40.10 Maintenance                     66,144                     38,584                         27.56 Supervision                     23,000                              -                                  -   Total                   145,284                     94,724                         67.66