Exercise 18-3 The controller of Furgee Industries has collected the following mo
ID: 2493508 • Letter: E
Question
Exercise 18-3 The controller of Furgee Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Month Total Maintenance Costs Total Machine Hours January $2,690 340 February 3,190 490 March 3,790 640 April 4,690 550 May 3,390 540 June 5,350 740 Determine the variable cost components using the high-low method. (Round variable cost to 3 decimal places e.g. 12.250.) Variable cost per machine hour $ Determine the fixed components using the high-low method. (Round answer to 0 decimal places e.g. 2,520.) Total fixed costs $
Explanation / Answer
high low method formula
variable Cost per Unit =y2 y1/x2 x1
Where,
y2 is the total cost at highest level of activity;
y1 is the total cost at lowest level of activity;
x2 are the number of units/labor hours etc. at highest level of activity; and
x1 are the number of units/labor hours etc. at lowest level of activity
feb 3190-490*3.33 = 1556.67fixed cost = semi variable cost- ( prodcution* vc per unit)
mar 3790-640*4= 1390
arprl 4690-550*(10)= 10190
may -3390- 540*(10)= 2010
june 5350- 740(9.8)= 1902
month maintence costs machine hours difference vc per unit maintenance hours jan 2690 340 feb 3190 490 500 150 3.333333 mar 3790 640 600 150 4 apr 4690 550 900 -90 -10 May 3390 540 -1300 -10 130 June 5350 740 1960 200 9.8Related Questions
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