Cost Estimation/ High-Low Method Werewolves Inc., has provided the following act
ID: 2434140 • Letter: C
Question
Cost Estimation/ High-Low Method
Werewolves Inc., has provided the following actual cost data foryour use in determining variable and fixed factory overheadcosts:
Quarters
Spring
Summer
Fall
Machine hours
70,000
80,000
90,000
Maintenance
$50,400
$56,700
$63,000
Indirect labor
$225,000
$250,000
$275,000
Indirect materials
$56,000
$64,000
$72,000
Warehousing
$90,000
$90,000
$90,000
Total Overhead cost
$421,400
$460,700
$500,000
Required:
Spring
Summer
Fall
Machine hours
70,000
80,000
90,000
Maintenance
$50,400
$56,700
$63,000
Indirect labor
$225,000
$250,000
$275,000
Indirect materials
$56,000
$64,000
$72,000
Warehousing
$90,000
$90,000
$90,000
Total Overhead cost
$421,400
$460,700
$500,000
Explanation / Answer
Indirect Labor - Mixed Indirect Materials - Variable Warehousing - FixedDifference Machine hours 70,000 90,000 20,000 Overhead Cost 421,400 500,000 78,600
Variable Cost 3.93 per machine hour
Fixed Cost 146,300
Unit 85,000
Variable Cost 334,050
Fixed Cost 146,300
Budgeted Cost 480,350
Difference Machine hours 70,000 90,000 20,000 Overhead Cost 421,400 500,000 78,600
Variable Cost 3.93 per machine hour
Fixed Cost 146,300
Unit 85,000
Variable Cost 334,050
Fixed Cost 146,300
Budgeted Cost 480,350