Problem 3-11 High-Low Method; Cost of Goods Manufactured [LO2] Sarnia Ltd. is a manufacturing company that produces a single product. The company keeps meticulous records of manufacturing activities from which the following information has been extracted: Number of units produced Cost of goods manufactured Work in process inventory, beginning Work in process inventory, ending. Direct materials cost per unit Direct labour cost per unit Manufacturing overhead cost, total March-Low 6,050 $176,400 $ 13,500. $ 22,500 $ $ 6 10 ? Manufacturing overhead cost for March Manufacturing overhead cost for June June-High 9,075 $274,500 $ 48,000 $ 31,500 6 10 ? The company's manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning. management wants to determine how much of the overhead cost varies with the number of units produced versus how much is fixed per month. Required: 1. For both March and June, estimate the amount of manufacturing overhead cost added to production.
Problem 3-11 High-Low Method; Cost of Goods Manufactured [LO2] Sarnia Ltd. is a manufacturing company that produces a single product. The company keeps meticulous records of manufacturing activities from which the following information has been extracted: Number of units produced Cost of goods manufactured Work in process inventory, beginning Work in process inventory, ending. Direct materials cost per unit Direct labour cost per unit Manufacturing overhead cost, total March-Low 6,050 $176,400 $ 13,500. $ 22,500 $ $ 6 10 ? Manufacturing overhead cost for March Manufacturing overhead cost for June June-High 9,075 $274,500 $ 48,000 $ 31,500 6 10 ? The company's manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning. management wants to determine how much of the overhead cost varies with the number of units produced versus how much is fixed per month. Required: 1. For both March and June, estimate the amount of manufacturing overhead cost added to production.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 68P: (Appendix 3A) Scattergraph, High-Low Method, Method of Least Squares, Use of Judgment The management...
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Step 1: Introduce to variable cost and fixed cost
VIEWStep 2: Working for direct materials cost and direct labor cost
VIEWStep 3: Working for manufacturing overhead cost for March
VIEWStep 4: Working for manufacturing overhead cost for June
VIEWStep 5: Working for cost equation using high low method
VIEWStep 6: Working for cost of goods manufactured at 7,050 units
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