high low method machine hours

Using the high-low method develop an estimate of variable electricity costs per machine hour. Quarter Work hours Cost 1 15000 4000000 2 20000 4800000 3 18000 4400000 4 21000 5000000.

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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 company wants to know the rate at which its electricity cost changes when the number of machine hours change. This preview shows page 21 - 25 out of 55 pages. Example of High-Low Method.

Using the high-low method develop an estimate of variable electricity costs per machine hour. High low method 1 machine hours maintenance costs. Plant activity is best measured by direct labor hours.

Given a set of data pairs of activity levels ie. Assuming these are the high and low months of activity the estimated fixed maintenance costs using the high-low method is _____. Month Amount Units Produced Delivery costs September 40000 40000 October 55000 60000 Utilities September 84000 40000 October 126000 60000 Which type of costs are these.

Find the fixed cost 3. The high-low method involves taking the highest level of activity. Prepare an overhead cost breakdown by using the high-low method.

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. Variable cost per machine hour Highest activity cost Lowest activity costHighest act. X Company uses the high-low method to estimate total overhead costs each month with machine hours as the activity measure.

Reynolds Company which uses the high-low method to analyze cost behavior has determined that machine hours best predict the companys total utilities cost. Following past monthly cost and activity information is available. Using the high-low method develop an estimate of fixed electricity costs per month.

High Low Method In Accounting Definition Formula It is shown below. School The University of Queensland. Course Title ACC 211.

High Low Method of Machine Hours 8000 10000 11000 9000 14000 12000 Total Maintenance Costs 600000 640000 800000 700000 900000 870000 Required. Machine-hours Labor Costs Highest observation of cost driver 1500 255000 Lowest observation of cost driver. The organization increments salaries and wages by 10 at the start of the 3rd.

HIGH-LOW METHOD Key Terms and Concepts to Know Variable Fixed and Mixed Costs. TERMS IN THIS SET 13 Two costs at Bradshaw Company appear below for specific months of operation. Now the formula for high low method is calculated.

State the cost function 4. The highest and the. Use High and low method to estimate Variable cost per unit 2.

Pages 55 Ratings 100 3 3 out of 3 people found this document helpful. 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. Units labor hours machine hours etc and the corresponding total cost figures high-low method only takes two extreme data pairs ie.

Estimate electricity costs for a month in which 3000 machine hours are. Factory overheadMachine hours. Using the high-low method develop a cost function for monthly electricity costs.

View the full answer. Barkoff Enterprises which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost. The Month Cost Machine Hours May 8646 2650 June 11157 4000 July 11808 4350 August 10785 3800 If machine hours in October are expected to be.

Taunton Company uses the high-low method to estimate its cost function. The information for 2017 is provided below. 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.

High Low Method Accounting Relevant Range Manufacturing Variable Costs. Period Semi-Variable Costs Machine Hours 1 100000 22000 2 120000 30000 3 96000 23600 If 29000 machine hours were budgeted for the. In cost accounting a way of attempting to separate out fixed and variable costs given a limited amount of data.

Solve Y if x 13000 machine hours. A company incurred 12000 of maintenance cost for 6500 machine hours in June and 14250 of maintenance costs for 8000 hours in August. 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.

Machine-Hours Maintenance Costs Highest observation of cost driver 140000 280000 Lowest observation of cost driver 95000 190000 Difference 45000 90000 Maintenance costs ab Machine-hours Slope coefficient b 90000 45000 2 per machine-hour Constant a 280000 2 140000 280000 280000 0 or. Prepare an estimate of overhead cost for a volume of 3000 machine hours by using Regression No. Month Direct Labor Hours Maintenance Cost January 1700 14300.

This method can be used advantageously. The analysis should be useful in helping predict variable and fixed costs under normal operating conditions. Machine Hours Electrical Cost January 4000 3120 February 6000 4460 March 4800 3500.

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.

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