![Required information [The following information applies to the questions displayed below.] The controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the firms costs will enable the firm to make better planning and control decisions. Among the costs the controller is concerned about is the behavior of indirect-materials cost. She believes there is a correlation between machine hours and the amount of indirect materials used. A member of the controllers staff has suggested that least-squares regression be used to determine the cost behavior of indirect materials. The regression equation shown below was developed from 40 pairs of observations. S- $215 $6H where S Total monthly cost of indirect materials H- Machine hours per month 5. Use the high-low method to estimate the behavior of the companys indirect-material cost. Express the cost behavior pattern in equation form. (Round variable cost per machine hour to 2 decimal places.) Indirect material cost- per machine hour](http://img.homeworklib.com/questions/138450e0-72a5-11ea-b1f3-95fa662474b1.png?x-oss-process=image/resize,w_560)
Homework Answers
Calculation of Indirect material cost:
|
April |
August |
|
|
Beginning Inventory |
1,650 |
2,400 |
|
Add: Purchases |
7,300 |
7,600 |
|
Less: Ending Inventory |
2,050 |
4,400 |
|
Indirect Material Cost (Consumed) |
6,900 |
5,600 |
Variable cost per machine hour = Difference in Cost/Difference in Machine hours
= 1,300/260
= $5
Fixed Component in Indirect Material = Total Cost – Variable Cost
= 6,900-1,350*5
= 150
Hence, the equation is:
Indirect material Cost = $150 + $5 per machine hour
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Required information [The following information applies to the questions displayed below.] The controller of Chittenango Chain...
Required information [The following information applies to the questions displayed below.] The controller of Chittenango Chain...
Required information [The following information applies to the questions displayed below.] The controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the firm’s costs will enable the firm to make better planning and control decisions. Among the costs the controller is concerned about is the behavior of indirect-materials cost. She believes there is a correlation between machine hours and the amount of indirect materials used. A member of the controller’s staff has suggested...
0 Required information [The following information applies to the questions displayed below controller of Chittenango Chain...
0 Required information [The following information applies to the questions displayed below controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the firm's costs will enable the firm to make better planning and control decisions. Among the costs the controller is concerned about is the behavior of indirect-miaterials cost. She believes there is a correlation between machine hours and the amount of indirect materials used. A member of the controller's staff has suggested...
Required information [The following information applies to the questions displayed below.] The controller of Chittenango Chain...
Required information [The following information applies to the questions displayed below.] The controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the firm’s costs will enable the firm to make better planning and control decisions. Among the costs the controller is concerned about is the behavior of indirect-materials cost. She believes there is a correlation between machine hours and the amount of indirect materials used. A member of the controller’s staff has suggested...
Help Required information The following information applies to the questions displayed below] The controller of Chittenango...
Help Required information The following information applies to the questions displayed below] The controller of Chittenango Chain Company believes thet the identification of the variable and fixed compon firm's costs will enable the firm to concerned about is the behavior of Indirect-materials cost. She belleves there is a correlation between machine hours and the amount of indirect materials used. make better planning and control decisions. Among the costs the controller is 5 A member of the controller's staff has suggested...
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Help Required information The following information applies to the questions displayed below] The controller of Chittenango Chain Company believes thet the identification of the variable and fixed compon firm's costs will enable the firm to concerned about is the behavior of Indirect-materials cost. She belleves there is a correlation between machine hours and the amount of indirect materials used. make better planning and control decisions. Among the costs the controller is 5 A member of the controller's staff has suggested...
this is a multi-part
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Required information The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows Direct materials: 5 pounds at $7 per pound Direct labor: 3 hours at $16 per hour 48 Variable overhead: 3 hours at $4 12 per hour $ 95 Total standard cost per unit The planning budget for...
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