PROBLEM 3-15 High-Low Method: Predicting Cost [LO1, LO3] Sawaya Co., Ltd., of Ja

Question

PROBLEM 3-15 High-Low Method: Predicting Cost [LO1, LO3] Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs (in Japanese yen, denoted Y) at high and low levels of activity for recent years are given below: Level of Activity Low High 75,000 50,000 ¥14,250,000 Total factory overhead costs ¥17,625,000

Explanation / Answer

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Indirect Material variable cost er Direct Labor HR 5000000/50000 100 Indirect Material (variable) 100*75000 7500000 Rent Fixed 6000000 Hence total Maintenace mixed 17625000-7500000-600000 4125000

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