Question
Read the given Analysis 4.1 Case Study. The case describes the costs and time details for a manufacturing company. Analysis 4.1 Case Study Carmichael Industries
Read the given Analysis 4.1 Case Study. The case describes the costs and time details for a manufacturing company. Analysis 4.1 Case Study Carmichael Industries is in the process of analyzing its manufacturing overhead costs. Carmichael Industries is not sure if the number of units produced or the number of direct labor (DL) hours is the best cost driver to be used for predicting manufacturing overhead (MOH) costs. The following information is available: Based on your reading and your understanding of the case study, complete the given tasks: o Are manufacturing overhead costs fixed, variable, or mixed? Explain. o Graph Carmichael Industries manufacturing overhead costs against direct labor hours. o Graph Carmichael Industries manufacturing overhead costs against units produced. o Does the data appear to be sound or do you see any potential data problems? Explain. o Use the high-low method to determine Carmichael Industries manufacturing overhead cost equation using direct labor hours as the cost driver. Assume that the management believes that all the data is accurate and wants to include all of it in the analysis. o Estimate manufacturing overhead costs if Carmichael Industries incurs 25,500 direct labor hours in January. Month Manufacturing Overhead Costs Direct Labor Hours Units Produced MOH Cost per DCL Hour MOH Cost per Unit Produced July $463,000 23,100 3,620 $20.04 $127.90 August 513,000 26,500 4,300 19.36 119.30 September 435,000 20,000 4,230 21.75 102.84 October 450,000 21,400 3,380 21.03 133.14 November 562,000 30,000 5,790 18.73 97.06 December 438,000 20,500 3,300 21.37 132.73 FN3140: Module 4 Costing and Cost Decisions Analysis 4.1 Cost Behavior Analysis 2
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