Question
Questions 6 is based on the following information: X Company's accountant has collected the following cost and activity information from the past two months to
Questions 6 is based on the following information:
X Company's accountant has collected the following cost and activity information from the past two months to help her develop a cost function that she could use to predict costs in July. Production in July is expected to be 9,600 units:
Month Overhead Cost Units Produced
May $25,200 7,400
June $29,000 9,300
6.a.) Assume the accountant used account analysis and data from May to develop the cost function. She collected the following additional May information: cost of supplies was $9,200, all variable, cost of utilities was $6,000, 70% variable, and cost of rent was $10,000, all fixed. Using the resulting cost function, what would be the estimate of total overhead costs in July?
b.) Assume the accountant used the high-low method to develop the cost function with the original May and June information (ignore Question 6 information). Using the resulting cost function, what would be the estimate of fixed overhead costs in July?
c.) Using the high-low method cost function, what would be the estimate of variable overhead costs per unit in July?
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