The DAC-59183 company's total overhead cost at various levels of activity is presented below: Month March April May June Machine Hours 5,000 4,000 6,000 9,000 Total Overhead Cost $ 32,500 $ 26,000 $ 39,000 $ 51,000 Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 4,000 machine-hour level of activity is as follows: Utilities (considered variable) Supervisory salaries (considered fixed) Maintenance (considered mixed) Total overhead cost $12,000 $4,000 $10,000 $ 26,000 Suppose the company uses the high-low method to estimate a cost formula for mixed costs. What is the total maintenance cost the company expects to incur at an activity level of 6,400 machine hours? O $15,600 O $15,300 O $14,800 O $14,400
The DAC-59183 company's total overhead cost at various levels of activity is presented below: Month March April May June Machine Hours 5,000 4,000 6,000 9,000 Total Overhead Cost $ 32,500 $ 26,000 $ 39,000 $ 51,000 Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 4,000 machine-hour level of activity is as follows: Utilities (considered variable) Supervisory salaries (considered fixed) Maintenance (considered mixed) Total overhead cost $12,000 $4,000 $10,000 $ 26,000 Suppose the company uses the high-low method to estimate a cost formula for mixed costs. What is the total maintenance cost the company expects to incur at an activity level of 6,400 machine hours? O $15,600 O $15,300 O $14,800 O $14,400
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 1EA: Steeler Towel Company estimates its overhead to be $250,000. It expects to have 100,000 direct labor...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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