QUESTION 7

1. Company ABC is a manufacturing company that provided the following information:

1. Assume the following hours of cleaning work and the total cleaning cost (mixed cost) for the six months:

	Number of hours	Total cleaning cost
January	8	$3,000
February	10	$3,410
March	13	$3,560
April	16	$4,180
May	14	$3,900
June	11	$3,450

Using the high-low method, estimate the cost formula for this cleaning cost (2 marks) and discuss the drawbacks of the high-low method (2 marks).

2. In the production of July, direct materials used totaled $280. Direct labor was $270 and manufacturing overhead was $200. The beginning work in process was $1,000 and ending work in process was $500. The beginning finished goods were $2,000 and ending finished goods was $1,000. What were total manufacturing costs incurred for the month? (2 marks) What was the cost of goods manufactured during the month? (2 marks) What was the cost of goods sold for the month? (2 marks)