Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

rd: 10.00 points Sawaya Co., Ltd., of Japan, is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to

rd: 10.00 points Sawaya Co., Ltd., of Japan, is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labour- hours worked in the factory. Total factory overhead costs (in Japanese yen, denoted ) at high and low levels of activity for recent years are provided below: Direct labour-hours 91,000 141,000 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 91,000-hour level of activity as follows: Level of Activity Low High Total factory overhead costs 12,193,000 15,266,000 Indirect materials (V) Rent (F) Maintenance (M) V = variable; F = fixed; M = mixed. 5,096,000 Total factory overhead costs 4,919,000 2,178,000 12,193,000 To have data available for planning, the company wants to break the maintenance cost down into its variable and fixed cost elements. Required: 1. Estimate how much of the 15,266,000 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the 15,266,000 consists of indirect materials and rent. Think about the behaviour of variable and fixed costs!) 2. By means of the high-low method of cost analysis, estimate a cost formula for maintenance. (Round the "Variable cost" to 2 decimal places.) Maintenance cost Y= + X 3. What total factory overhead costs would you expect the company to incur at an operating level of 52,000 direct labour-hours? (Do not round intermediate calculations.) Total factory overhead costs

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

Accounting And Finance For Non Finance Managers

Authors: Jai Kumar Batra

1st Edition

9352806964, 978-9352806966

More Books

Students also viewed these Accounting questions

Question

mple 10. Determine d dx S 0 t dt.

Answered: 1 week ago