high low method machine hours

Machine Hours Electrical Cost January 4000 3120 February 6000 4460 March 4800 3500. Lets begin by determining the formula that is used to calculate the variable cost slope.

High Low Method Calculate Variable Cost Per Unit And Fixed Cost

Assume that the relevant range includes all of the activity levels mentioned in this problem.

. Using either the high or low activity cost should yield approximately the same fixed cost value. Given a set of data pairs of activity levels ie. Period Semi-Variable Costs Machine Hours 1 100000 22000 2 120000 30000 3 96000 23600 If 29000 machine hours were budgeted for the next period estimated semi-variable costs would total A.

The companys relevant range of activity varies from a low of 600 machine hours to a high of 1200 machine hours with the following data being available for the first six months of the year. The companys relevant range of activity varies from a low of 600 machine hours to a high of 1100 machine hours with the following data being available for the first six months of the year. HIGH-LOW METHOD Key Terms and Concepts to Know Variable Fixed and Mixed Costs.

The highest and the. Problem 2 Electrical costs at one of R Companys factories are listed below. Fixed cost 105450 7497 x 1000 30480.

A Using the high-low method separate the cost of goods sold and operating expenses into their variable and fixed elements. Machine-Hours Electrical Cost March 413 7371 April 506 7740. Barkoff Enterprises which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost.

B Determine the cost formula for each type of cost. Note that our fixed cost differs by 635 depending on whether we use the high or low activity cost. The companys relevant range of activity varies from a low of 600 machine hours to a high of 1200 machine hours with the following data being available for the first six months of the year.

If Casablanca expects to incur 185000 machine hours next month what will the estimated total overhead cost be using the high-low method. Hotlanta Inc which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost. A manufacturing company estimates semi-variable costs by using the high-low method with machine hours as the cost driver.

Change in cost Change in volume Variable cost slope 는 - X Data table Round the variable cost to the nearest cent Using the high-low method the variable utilities cost per machine hour is 160 Machine Hours 1050 Requirement 2. It is a nominal difference and choosing either fixed cost for our cost model will suffice. Recent data are shown below.

Units labor hours machine hours etc and the corresponding total cost figures high-low method only takes two extreme data pairs ie. Barkoff Enterprises which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost. Month Direct Labor Hours Maintenance Cost January 1700 14300.

Plant activity is best measured by direct labor hours. High-Low method is one of the several mathematical techniques used in managerial accounting to split a mixed cost into its fixed and variable components. Based on the following information calculate fixed costs per month using the high-low method.

Machine Hours 22000 32000 26000 24000 Cost 56000 May June July August Oa. Machine-Hours Maintenance Costs Highest observation of cost driver 140000 280000 Lowest observation of cost driver 95000 190000 Difference 45000 90000 Maintenance costs a b Machine-hours Slope coefficient b 90000 45000 2 per machine-hour Constant a 280000 280000 0 or Constant a 190000. 11000 76000 58000 66000.

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