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Copper Mountain Company has accumulated the following data over a six-month period: Indirect Labor Hours Indirect Labor Costs January ................................... 400 $ 6,000 February ..................................

Copper Mountain Company has accumulated the following data over a six-month period: Indirect Labor Hours Indirect Labor Costs

January ................................... 400 $ 6,000

February .................................. 500 7,000

March ..................................... 600 8,000

April ...................................... 700 9,000

May ....................................... 800 10,000

June ...................................... 900 11,000

3,900 $51,000 Chapter 4 Accounting for Factory Overhead 217

Separate the indirect labor into its xed and variable components, using the high-low method. E4-3 Scattergraph method Using the data in E4-2 and a piece of graph paper:

1. Plot the data points on the graph and draw a line by visual inspection, indicating the trend shown by the data points.

2. Determine the variable cost per unit and the total xed cost from the information on the graph.

E4-4 Least-squares regression method Using the data in E4-2 and Microsoft Excel, determine:

1. The variable cost per unit, the total xed cost, and R2.

2. The plotted data points using Chart Wizard.

3.Compare the results to your solutions in E4-2 and E4-3.

E4-5 Computing unit costs at different levels of production Scentsation, Inc., budgeted for 12,000 bottles of perfume Oui during the month of May. The unit cost of Oui was $20, consisting of direct materials, $7; direct labor, $8; and factory overhead, $5 (xed, $2; variable, $3).

a. What would be the unit cost if 10,000 bottles were manufactured? (Hint: You must rst determine the total xed costs.)

b. What would be the unit cost if 20,000 bottles were manufactured?

c. Explain why a difference occurs in the unit costs.

E4-6 Identifying basis for distribution of service department costs What would be the appropriate basis for distributing the costs of each of the following service departments to the user departments?

a. Building maintenance

b. Inspection and packing

c. Machine repair

d. Human resources

e. Purchasing

f. Shipping

g. Raw materials storeroom

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