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Waverly Welding | ||
High Low method | ||
Variable cost= | (Highest activity cost- Lowest activity cost)/ (Highest activity units- Lowest activity units) | |
Highest activity is in August. Labor hours is 8714 which is highest among all other months. Overhead cost in August is 82,882. | ||
Lowest activity is in May. Labor hours is 3214 which is lowest among all other months. Overhead cost in May is 47,682. | ||
Overhead | Direct Labor hours | |
Highest activity | 82,882.00 | 8,714.00 |
Lowest activity | 47,682.00 | 3,214.00 |
Difference | 35,200.00 | 5,500.00 |
Variable cost per unit | 6.40 | |
Fixed cost | Highest activity cost- (Highest units * Variable cost per unit) | |
Fixed cost | 82,882-(8,714*6.40) | |
Fixed cost | 27,112.00 | |
So overhead cost equation is | ||
Y= 27,112+ 6.40X |
Waverley Welding Company provides welding services for a variety of industrial customers in the manufacturing, aerospace,...
Waverley Welding Company provides welding services for a variety of industrial customers in the manufacturing, aerospace, and electronics industries. The number of jobs completed from one month to the next varies considerably, and jobs differ in terms of the complexity of the welding requirements. More complex jobs can take significantly longer to complete. Management knows that overhead costs have a fixed and a variable component but, until now, has not attempted to determine which measure of activity should be used...
Waverley Welding Company provides welding services for a variety of industrial customers in the manufacturing, aerospace, and electronics industries. The number of jobs completed from one month to the next varies considerably, and jobs differ in terms of the complexity of the welding requirements. More complex jobs can take significantly longer to complete. Management knows that overhead costs have a fixed and a variable component but, until now, has not attempted to determine which measure of activity should be used...
Waverley Welding Company provides welding services for a variety of industrial customers in the manufacturing, aerospace, and electronics industries. The number of jobs completed from one month to the next varies considerably, and jobs differ in terms of the complexity of the welding requirements. More complex jobs can take significantly longer to complete. Management knows that overhead costs have a fixed and a variable component but, until now, has not attempted to determine which measure of activity should be used...
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