Problem 6-39 Cost Behavior and Analysis; High-Low Method (LO 2, 5)
The following selected data were taken from the accounting records of Manitoba Manufacturing Company. The company uses direct-labor hours as its cost driver for overhead costs.
Month Direct-Labor Hours Manufacturing
Overhead
January 26,000 749,250
February 25,000 720,000
March 28,000 772,500
April 23,000 681,000
May 30,000 775,500
June 34,000 879,000
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June's costs consisted of machine supplies ($153,000), depreciation ($22,500), and plant maintenance ($703,500). These costs exhibit the following respective behavior: variable, fixed, and semivariable.
The manufacturing overhead figures presented in the preceding table do not include supervisory labor cost, which is step-fixed in nature. For volume levels of less than 15,000 hours, supervisory labor amounts to $67,500. The cost is $135,000 from 15,000—29,999 hours and $202,500 when activity reaches 30,000 hours or more.
Requirement 1:
Determine the machine supplies cost and depreciation for April. (Omit the "$" sign in your response.)
Supplies cost
$
Depreciation
$
Requirement 2:
(a)
Using the high-low method, calculate the variable cost per direct-labor hour. (Omit the "$" sign in your response.)
Variable cost
$
per hour
(b)
Using the high-low method, compute Manitoba Manufacturing Company's plant maintenance cost and calculate the monthly variable cost and fixed cost. (Omit the "$" sign in your response.)
Higher Method
Lower Method
Plant maintenance cost
$
$
Variable cost
$
$
Fixed cost
$
$
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Requirement 3:
Assume that present cost behavior patterns continue into the latter half of the year. Estimate the total amount of manufacturing overhead the company can expect in October if 29,500 direct-labor hours are worked. (Omit the "$" sign in your response.)
Manufacturing overhead cost
$
