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

Question

X Company wants to estimate overhead costs in March, when production is expected to be 1,300 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.

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

Total   Total                 Total Variable Utilities $40,900 $40,900       Maintenance 68,000 35,360       Supervision 23,000                                        

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Explanation / Answer

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Total   Total Variable Utilities $41,800 $41,800 Maintenance 50,000 25,000 Supervision 20,000 Product cost per unit Utilities $41.80 Maintenance $50.00 Supervision $20.00 If we apply product per units to march Production of 1500 units product cost per unit Total Overhead costs Total Variable costs Utilities $41.80 $62,700.00 $62,700.00 Maintenance $50.00 $75,000.00 $50,000.00 Supervision $20.00 $30,000.00 0

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