Kumar Co. is attempting to predict its maintenance costs more
accurately. Maintenance costs are a mixed cost. Maintenance costs
and machine hours for the first four months of the year are as
follows:
Month | Maintenance Costs | Machine Hours |
Jan. | $8,430 | 1,320 |
Feb. | 7,620 | 1,190 |
Mar. | 8,810 | 1,430 |
Apr. | 7,580 | 1,130 |
Required:
Using the high-low method, calculate unit variable cost and monthly
fixed costs.
Calculation of Variable Cost per Unit:
Variable Cost per Unit = (y2 - y1) / (x2 - x1)
where y2 = the total cost at highest level of
activity = 8,810
y1 = the total cost at lowest level of activity =
7,580
x2 = the number of labor hours at highest level of
activity = 1,430
x1 = the number of labor hours at lowest level of
activity = 1,130
So, Variable cost per unit = (8,810 - 7,580) / (1,430 - 1,130)
= 1,230 / 300 = $4.10 Ans.
Calculation of Monthly Fixed Cost: Monthly Fixed Cost = y2 − bx2 = y1 − bx1 where y2 = the total cost at highest level of
activity = 8,810 b = Variable cost per unit So, Monthly fixed cost = 8,810 - (4.10 * 1,430) = 7,580 - (4.10 * 1,130) =$2,947 Ans. |
Kumar Co. is attempting to predict its maintenance costs more accurately. Maintenance costs are a mixed...
Armer Company is accumulating data to use in preparing its annual profit plan for the coming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff has suggested the use of linear regression to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis follow: Maintenance Machine Month Cost Hours $ 4,350 3,150 3,750 2,970 4,500 3,110 3,180 4,620...
Midgett Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff suggested that linear regression be employed to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis are as follows: Month Maintenance Cost Machine Hours Jan. $ 5,070 520 Feb. 3,657 350 Mar....
What would the monthly fixed maintenance cost be? Maintenance costs at Seaside Manufacturing over the past six months are listed in the following table. Month January February March April Maintenance cost $13,600 $14,720 $12,000 $14,480 $15,000 $13,200 Machine hours 15,500 16,900 13,000 16,600 18,000 15.000 May June Using the high-low method, what would the monthly fixed maintenance cost bo? (Round any intermediary calculations to the nearest cent) O A $3,000 O B. $4,200 OC. $27,000 OD. $10,800
Maintenance costs at Seaside Manufacturing over the past six months are listed in the following table. Month January February March April May June Maintenance cost $13,600 $14,720 $13,000 $14,480 $15,000 $13,200 Machine hours 15,500 16,900 13,000 16,600 18,000 15,000 Using the high-low method, what would the monthly fixed maintenance cost be? (Round any intermediary calculations to the nearest cent.) O A. $7,800 OB. $7,200 O C. $28,000 OD. $2,000
Armer Company is accumulating data to use in preparing its annual profit plan for the coming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff has suggested the use of linear regression to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis follow: Month Maintenance Cost Machine Hours Jan. $ 5,150 480 Feb. 3,950 330 Mar. 4,550...
Armer Company is accumulating data to use in preparing its annual profit plan for the coming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff has suggested the use of linear regression to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis follow: Maintenance Month Cost Machine Hours Jan. $ 5,150 860 Feb. 3,950 700 Mar. 4,550...
Armer Company is accumulating data to use in preparing its annual profit plan for the coming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff has suggested the use of linear regression to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis follow: Month Maintenance Cost Machine Hours Jan. $ 4,550 620 Feb. 3,350 460 Mar. 3,950...
Armer Company is accumulating data to use in preparing its annual profit plan for the coming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff has suggested the use of linear regression to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis follow Maintenance Machine 24 Month Cost $ 4,200 3,000 3,600 2,820 4,350 2,960 3,030 4,470...
Armer Company is accumulating data to use in preparing its annual profit plan for the coming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff has suggested the use of linear regression to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis follow: Month Maintenance Cost Machine Hours Jan. $ 4,200 480 Feb. 3,000 320 Mar. 3,600...
Scenario: Styles Wing Bicycle Company manufactures and sells 2 sizes of bicycles, 21.5 inch and 22.5 inch. Sales Their sales team has committed to the following projected monthly unit sales for the next year. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 21.5 Bike 368 472 633 616 443 345 322 317 317 317 328 22.5 Bike 320 410 550 535 385 300 280 275 275 275 285 Dec 420 365 The selling price for the 21.5...