high low method machine hours

Machine-hours Labor Costs Highest observation of cost driver 400 10000 Lowest observation of cost driver 240 6800 2. The high-low method involves taking the highest level of activity.

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Use the high-low method to determine the hospitals cost equation using nursing hours as the cost driver.

. Advertisement Advertisement New questions in Business. Click the icon to view the data X Data table Read the requirements Month Requirement 1. Assume that the cost of electricity at a small manufacturing facility is a mixed cost since the company has only one electricity meter for air quality cooling lighting and for its production equipment.

I Give short introduction of the professions in tourism sector. Variable cost refers to the cost that vary with production such as direct material direct labour and so on. Plant activity is best measured by direct labor hours.

The highest and the. 3 Total cost on 1220 Machine hour will be 1220161740 3692. Observed that at 21000 machine hours of activity total maintenance costs averaged.

The company wants to know the rate at which its electricity cost changes when the number of machine hours change. Total costsfixed costsvariable cost. 2 Fixed cost Total cost-variable cost 3388-103016 Fixed cost 1740.

The Hunter Company uses the high-low method to estimate the cost function. Using the highlow method of analysis the estimated variable cost per machine hour is. The formula used in computing the rate is.

Variable utilities cost per machine hour Change in costhigh machine hour-low machine hour 4076-33881460-1030. So the answer is a. Month Machine-Hours Total Overhead Cost April 47000 211050 May 37000 182550 June 57000 239550 July 67000 268050 Assume that the total overhead cost above consists of utilities.

Given a set of data pairs of activity levels ie. 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. The organization increments salaries and wages by 10 at the start of the 3rd.

978-0-07-802542-6 PROBLEM 2-21 PAGE 60 PROBLEM 2â 21 High-Low Method. The total predicted overhead costs for the month is 489500. 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.

In cost accounting a way of attempting to separate out fixed and variable costs given a limited amount of data. To solve this using the high-low method formula subtract the lower cost from the higher cost to get a numerator of 27675 then subtract the lowest number of units from the highest quantity to. The total maintenance cost at 25000 machine hours is given as.

Jackson Company which uses the high-low method to analyze cost behavior has determined that machine hours best predict the companys total utilities cost. If factory overhead is Rs 3 00000 and total machine hours are 1500 the machine hour rate is Rs 200 per machine hour Rs 3 00000 1500 hours. Based on the following information calculate fixed costs per month using the high-low method.

Month Direct Labor Hours Maintenance Cost January 1700 14300. The use of such a relationship of total factory overhead to changes in machine hours is said to be valid only within the relevant range which means. Machine Hours Electrical Cost January 4000 3120 February 6000 4460 March 4800 3500.

A manufacturing company estimates semi-variable costs by using the high-low method with machine hours as the cost driver. Cost per month 39200 32000. The companys cost and machine hour usage data for the first six months of the year follow.

Units labor hours machine hours etc and the corresponding total cost figures high-low method only takes two extreme data pairs 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. Machine Hours 22000 32000 26000 24000 Cost 56000 May June July August Oa.

Predicting Cost LO 2â 3. Recent data are shown below. If Casablanca expects to incur 185000 machine hours next month what will the estimated total overhead cost be using the high-low method.

Example of High-Low Method. Uses the highlow method to analyze cost behavior. When activityjumped to 25000 machine hours which.

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. What is the estimate of the total cost when 300 machine-hours are used. Quarter Work hours Cost 1 15000 4000000 2 20000 4800000 3 18000 4400000 4 21000 5000000.

Machine hours 24000 15000. HIGH-LOW METHOD Key Terms and Concepts to Know Variable Fixed and Mixed Costs. 11000 76000 58000 66000.

Up to 256 cash back Get the detailed answer. Read more under the high-low. Assume that the relevant range includes all of the activity levels mentioned in this problem.

The information for 20x3 is provided below. Round the variable cost to the nearest cent y 1310 x 162000 Predict total overhead costs if 25 comma 00025000 nursing hours are predicted for the month. Hotlanta Inc which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost.

Variable utilities cost per machine hour 16 per machine hour. High Low Method is a mathematical technique used to determine the fixed and variable elements of historical costs that are partially fixed and partially variable. The formula for the calculation of variable cost and fixed cost Variable Cost And Fixed Cost A fixed cost is a constant expense that is independent of the number of units produced such as rent payable salaries payable and other utilities payable.

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