Question

Please provide answers for 4 requirements.

E3-42A (similar to) A Question Help 0 Pur Source produces agricultural irrigation equipment. During a year, the amount of overhead costs on a per month basis varies in relation to the machine hours used in a given year. The low for the past year was 4,230 hours, and the expense associated was $88,880. The high for the period was 9,300 hours, and the associated expense was $147,467. During the low month, the $88,880 in overhead costs consisted of indirect materials of $42,300 (a variable expense), rent of $34,000 (a fixed expense), and maintenance costs of $12,580 (a mixed expense). Requirements Requirement 1a. Given the breakdown of expenses in the low period, what are the estimated costs for indirect materials during the high period? (Round to the nearest whole dollar.) The estimated costs for indirect materials are $ 93000. Requirement 1b. Given the breakdown of expenses in the low period, what are the estimated costs for rent during the high period? (Round to the nearest whole dollar.) The estimated costs for rent are $ 34000. Requirement 1c. Given the breakdown of expenses in the low period, what are the estimated costs for maintenance during the high period? (Round to the nearest whole dollar.) The estimated costs for maintenance are $ 20467 . Requirement 2. What is the cost function for maintenance costs? (Round the variable cost to the nearest cent and the fixed cost to the nearest whole dollar.) The cost function for maintenance costs is y = $x + $ 34000 Requirements 1. Given the breakdown of expenses in the low period, what are the estimated costs for (a) indirect materials, (b) rent, and (c) maintenance during the high period? 2 What is the cost function for maintenance costs? 3. What amount of maintenance costs would be expected with 7,800 machine hours of work? 4. What would be the total overhead costs at 7,800 machine hours? Print Done

Answer 1

$ 10 per hour Low month (4,230 hours) Variable $ 42,300 / 4230 hours Fixed Cost $ 34,000 Mixed Cost $ 12,580 High month (9,300 hours) Total Cost Variable ($10 x 9300) less: Fixed Cost Mixed Cost $1,47,467 $ 93,000 $ 34,000 $ 20,467 Now, Calculate Cost function for Maintenance cost (mixed) Cost Hours High $ 20,467 9300 less: Low $ 12,580 4230 $ 7,887 5070 Variable Component $ 7,887 / 5070 $ 1.56 per hour Fixed Component $ 12,580 - ($ 1.56 x 4230) $ 12,580 - $ 6580 $ 6,000 II Solutions 1 a) The estimated costs for Indirect Materials are 1 b) The estimated costs for rent are 1 c) The estimated costs for maintained are 2) The Cost funcion for maintenance cost is y= $ 93,000 $ 34,000 $ 20,467 $ 1.56 X + $ 6,000

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