Question
A manufacturing company's total manufacturing overhead (MOHI costs fluctuate somewhat from month to month according to the number of machine hours worked in its production
A manufacturing company's total manufacturing overhead (MOHI costs fluctuate somewhat from month to month according to the number of machine hours worked in its production facility. These costs for the last four months are given below.
|
| Machine hours | Total MOH |
| October | 7,500 | $65,300 |
| November | 9,000 | $70,500 |
| December | 6,000 | $60,000 |
| January | 10,000 | $80,000 |
The manufacturing overhead costs above consist of rent, indirect materials, and utilities. The company has analyzed these costs at the 6,000 machine-hours level of activity as follows:
| Rent (fixed) 10,000 |
| Indirect Materials (variable) 18,000 |
| Utilities (mixed) ? $2,400 |
| Total factory overhead costs $60,000 |
The company expects that it will work for 6,200 machine-hours in February. Using the high-low method, how much is the estimated utilities cost in February?
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