Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Crosshill Company's total overhead costs at various levels of activity are presented below: Month April May June July Machine- Hours 51,000 41,000 61,000 71,000 Total

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Crosshill Company's total overhead costs at various levels of activity are presented below: Month April May June July Machine- Hours 51,000 41,000 61,000 71,000 Total Overhead Cost $208,270 $181,570 $234,970 $261,670 Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 41,000-machine-hour level of activity in May is as follows: $ Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) 61,500 56,000 64,070 Total overhead cost S 181,570 The company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $261,670 of overhead cost in July was maintenance cost. (Hint: To do this, first determine how much of the $261,670 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.) (Do not round intermediate calculations.) Maintenance cost in July $ 99,170 Crosshill Company's total overhead costs at various levels of activity are presented below: Month April May June July Machine- Hours 51,000 41,000 61,000 71,000 Total Overhead Cost $208,270 $181,570 $234,970 $261,670 Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 41,000-machine-hour level of activity in May is as follows: $ Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) 61,500 56,000 64,070 Total overhead cost S 181,570 The company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $261,670 of overhead cost in July was maintenance cost. (Hint: To do this, first determine how much of the $261,670 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.) (Do not round intermediate calculations.) Maintenance cost in July $ 99,170 2. Using the high-low method, estimate a cost formula for maintenance. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) Machine- Hours Maintenance Cost High activity level Low activity level Change per MH Variable cost element Fixed cost element Y= + X 3. Express the company's total overhead cost in the form Y = a +bX. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) Variable Cost per Machine-Hour Fixed Cost Utilities cost Supervisory salaries cost Maintenance cost Total overhead cost Y = 1 4. What total overhead cost would you expect to be incurred at an activity level of 46,000 machine-hours? (Do not round intermediate calculations.) Total overhead cost

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Assurance Services

Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan

16th Global Edition

1292147989, 978-1292147987

More Books

Students also viewed these Accounting questions

Question

Draw a labelled diagram of the Dicot stem.

Answered: 1 week ago