Question

The following selected data were taken from the accounting records of Metcalf Manufacturing. The company uses direct-labor hours as its cost driver for overhead costs.

Month	Direct-Labor Hours	Manufacturing Overhead
January	37,000	$	701,000
February	39,000		740,000
March	52,000		899,000
April	40,000		754,250
May	44,000		805,500
June	42,000		802,500

March’s costs consisted of machine supplies ($296,400), depreciation ($32,500), and plant maintenance ($570,100). These costs exhibit the following respective behavior: variable, fixed, and semivariable.

The manufacturing overhead figures presented in the preceding table do not include Metcalf’s supervisory labor cost, which is step-fixed in nature. For volume levels of less than 15,000 hours, supervisory labor amounts to $77,500. The cost is $155,000 from 15,000–29,999 hours and $232,500 when activity reaches 30,000 hours or more.

Required:

1. Determine the machine supplies cost and depreciation for January.

2. Using the high-low method, analyze Metcalf’s plant maintenance cost and calculate the monthly fixed portion and the variable cost per direct-labor hour.

3. Assume that present cost behavior patterns continue into the latter half of the year. Estimate the total amount of manufacturing overhead the company can expect in November if 29,900 direct-labor hours are worked.

1-

Determine the machine supplies cost and depreciation for January.

	Machine supplies cost Depreciation

• Using the high-low method, analyze Metcalf’s plant maintenance cost and calculate the monthly fixed portion and the variable cost per direct-labor hour. (Round your "Variable cost per hour" answer to 2 decimal places.)

  	Variable cost per hour Fixed cost per month

• Assume that present cost behavior patterns continue into the latter half of the year. Estimate the total amount of manufacturing overhead the company can expect in November if 29,900 direct-labor hours are worked.

  	Manufacturing overhead cost

Answer 1