[trk12]

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



--------------------------------------------------------------------------------

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
$

$



--------------------------------------------------------------------------------

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
$

[kb4kr]

How do I work out the 10% discount of R32320.00