high low method machine hours

Plant activity is best measured by direct labor hours. Accounting QA Library Hotlanta Inc which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost.

Estimate A Variable And Fixed Cost Equation And Predict Future Costs Principles Of Accounting Volume 2 Managerial Accounting

The high-low method involves taking the highest level of activity.

. 3 Total cost on 1220 Machine hour will be 1220161740 3692. 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. Use the high-low method to estimate the variable and fixed components of this cost.

A manufacturing company estimates semi-variable costs by using the high-low method with machine hours as the cost driver. What is the estimate of the total cost when 300 machine-hours are used. The organization increments salaries and wages by 10 at the start of the 3rd.

The total predicted overhead costs for the month is 489500. 11000 76000 58000 66000. 2 Fixed cost Total cost-variable cost 3388-103016 Fixed cost 1740.

Variable utilities cost per machine hour 16 per machine hour. 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. Month Maintenance Cost Machine Hours.

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. The Hunter Company uses the high-low method to estimate the cost function. The high-low method comprises the highest and the lowest level of activity and comparison of the.

Uses the highlow method to analyze cost behavior. Hotlanta Inc which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost. Recent data are shown below.

Barkoff Enterprises 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. Battle Company which uses the high low method to analyze cost behavior has determined that machine hours bent predict the comparys total lines cost.

A controller is interested in analyzing the fixed and variable costs of. 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. Recent data are shown below.

In this case we will use the higher amounts. We can select either the high or low figures from the previous example. The company wants to know the rate at which its electricity cost changes when the number of machine hours change.

Compute the variable component rounding off to the nearest whole cent. 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. Y bar 1000 2 x bar.

This equation was probably found by using the mathematical techniques called. The information for 20x3 is provided below. Month Direct Labor Hours Maintenance Cost January 1700 14300.

Click the icon to view the data Read the requirements 12 Cm. The company observed that at 21000 machine hours of activity total maintenance costs averaged 3620 per hour. When activityjumped to 25000 machine hours which was still within the relevant range the average total cost per machine hour was 3140.

In cost accounting the high-low method refers to the mathematical technique that is used to separate fixed and variable components that are otherwise part of the historical cost that is mixed in nature ie partially fixed and partially variable. Quarter Work hours Cost 1 15000 4000000 2 20000 4800000 3 18000 4400000 4 21000 5000000. The companys cost and machine hour usage data for the first six months of the year follow.

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. Machine Hours 22000 32000 26000 24000 Cost 56000 May June July August Oa. If 29000 machine hours were budgeted for the next period estimated semi-variable costs would total.

Based on the following information calculate fixed costs per month using the high-low method. At an activity level of 8300 machine-hours in a month B Companys total variable maintenance cost is 220448 and its total fixed maintenance cost is. Example of High-Low Method.

As a result of analyzing the relationship of total factory overhead to changes in machine hours the following relationship was found. Assume that the relevant range includes all of the activity levels mentioned in this problem. C 14330 d 26745 7.

High and Low Points Method. Use the high-low method to determine the hospitals cost equation using nursing hours as the cost driver. Total cost fixed costs variable cost per unit x number of units 34000.

Variable utilities cost per machine hour Change in costhigh machine hour-low machine hour 4076-33881460-1030. 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. 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.

Machine Hours Electrical Cost January 4000 3120 February 6000 4460 March 4800 3500. Machine-hours Labor Costs Highest observation of cost driver 400 10000 Lowest observation of cost driver 240 6800 2. Assuming Cosco Company uses the high-low method of analysis the fixed cost of maintenance would be.

HIGH-LOW METHOD Key Terms and Concepts to Know Variable Fixed and Mixed Costs. In cost accounting a way of attempting to separate out fixed and variable costs given a limited amount of data. Accounting questions and answers.

High Low Method Calculate Variable Cost Per Unit And Fixed Cost