Question

In: Accounting

Eagle Manufacturing has incurred the following machine maintenance costs over the first half of 2018: Month...

Eagle Manufacturing has incurred the following machine maintenance costs over the first half of 2018: Month Machine Hours Cost ($) January 10,000 15,500 February 15,000 16,233 March 12,750 15,985 April 13,268 16,025 May 9,256 11,159 June 10,335 15,117 Required: Using the High – Low method compute: a. The variable cost component of the Maintenance Costs. b. The fixed cost component of the Maintenance Costs. c. The total Maintenance Costs for the month of July, which is projected to use 13,295 machine hours.

Solutions

Expert Solution

Note: The variable cost per machine hour is rounded off to 5 decimal places for accuracy, in the absence of specific instructions regarding rounding off. All other amounts are rounded off to the nearest whole dollar. Kindly round off as required since the answers would vary depending on the number of decimal places to which rounded off.

a. The variable cost component of the Maintenance Costs: $0.88336 per machine hour

b. The fixed cost component of the Maintenance Costs: $2983

c. The total Maintenance Costs for July: $14727

Working:

Machine Hours Maintenance Costs
High activity level 15000 $16,233
Low activity level 9256 $11,159
Change 5744 $5,074

a. Variable cost per machine hour = $5074/5744 = $0.88336

b. Fixed cost (at high level) = $16233 - (15000 x $0.88336) = $16233 - $13250 = $2983

Fixed cost (at low level) = $11159 - (9256 x $0.88336) = $11159 - $8176 = $2983

c. Maintenance Costs for July = $2983 + (13295 x $0.88336) = $2983 + $11744 = $14727

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

A machine has no maintenance costs the first 5 years of operation. At the end of...
A machine has no maintenance costs the first 5 years of operation. At the end of years 6-10, the annual cost is $1000/yr. For years 11-15, the annual cost is $2000/yr. What is the equivalent annual cost for all of this maintenance if the interest rate is 10%?
Eagle Corporation has provided the following partial listing of costs incurred during August:   Marketing salaries $...
Eagle Corporation has provided the following partial listing of costs incurred during August:   Marketing salaries $ 46,400      Property taxes, factory $ 18,500      Administrative travel $ 98,900      Sales commissions $ 50,000      Indirect labor $ 38,900      Direct materials $ 172,400      Advertising $ 147,800      Depreciation of production equipment $ 46,900      Direct labor $ 87,500    Required: a. What is the total amount of product cost listed above?       b. What is the total amount of...
A business operated at 100% of capacity during its first month and incurred the following costs:...
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (18,600 units): Direct materials $172,100 Direct labor 234,800 Variable factory overhead 267,600 Fixed factory overhead 100,300 $774,800 Operating expenses: Variable operating expenses $131,500 Fixed operating expenses 46,900 178,400 If 1,800 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? The actual price for a product was...
A business operated at 100% of capacity during its first month and incurred the following costs:...
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (18,100 units): Direct materials $171,800 Direct labor 220,400 Variable factory overhead 256,100 Fixed factory overhead 102,000 $750,300 Operating expenses: Variable operating expenses $128,600 Fixed operating expenses 43,000 171,600 If 1,600 units remain unsold at the end of the month and sales total $1,143,000 for the month, what would be the amount of income from operations reported on the variable costing income statement?...
A business operated at 100% of capacity during its first month and incurred the following costs:...
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units):   Direct materials $170,000   Direct labor 360,000   Variable factory overhead 190,000   Fixed factory overhead     50,000 $770,000 Operating expenses:   Variable operating expenses $ 60,000   Fixed operating expenses     18,000 78,000 If 500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? a.$41,500 b.$42,800 c.$38,500 d.$36,000
A business operated at 100% of capacity during its first month and incurred the following costs:...
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (5,000 units): Direct materials-$70,000 Direct labor-20,000 Variable factory overhead-10,000 Fixed factory overhead-20,000 total $102,000 Operating expenses: Variable operating expenses-$17,000 Fixed operating expenses-1,000 total $18000 Prepare a variable income statement assuming 1000 units remain unsold at the end of the month and sales total $160,000 for the month
During the month of March, Special Corporation incurred the following manufacturing costs. Depreciation of factory building...
During the month of March, Special Corporation incurred the following manufacturing costs. Depreciation of factory building $1250. Employer fringe benefits payable $4,950. Factory wages payable $48,200. Factory building insurance payable $1725. Raw ,aterials on account $20,000. Raw materials purchased for cash $21,600. Utilities for factory not yet paid $4000. Depreciation of factory equipment $2400. Insurance for factory used up $3300. there should be 3 sets of journals, journalize in order thank you
During the month of January, the following costs were incurred:
  During the month of January, the following costs were incurred: 2010 Jan 8     Purchased Materials for cash, $150,000 Jan 10    Requisition for Direct Materials that were put into production, $100,000 Jan 20    Requisitioned for Indirect Materials that were put into production, $4,000. Jan 23    Direct Labor cost incurred during the period, $60,000 when the labor rate per hour was $5. Jan 25    Indirect labor cost incurred during the month of January is $6,000. Jan 28    Paid factory supervisor’s salaries...
The invoice price of a manufacturing machine is $1,600,000. The company incurred other costs relating to...
The invoice price of a manufacturing machine is $1,600,000. The company incurred other costs relating to the acquisition and installation of the machine (freight-in, wiring, labor for installation, etc.) that totaled $18,500. Management estimates that the machine has a 7-year life with no residual value. The chief executive officer, in a conversation with the chief financial officer, suggests that the incidental costs of $18,500 should be expensed immediately, and offered the following rationale: A. If the machine was sold, the...
Machine X costs $248,751 and has annual operating and maintenance costs of $9,980. Machine Y costs...
Machine X costs $248,751 and has annual operating and maintenance costs of $9,980. Machine Y costs $264,500 and has annual operating and maintenance cost of $5,120. Both machines are Class 39, which specifies a CCA rate of 25%. The company needs the machines for 11 years, and at the end of year 11 machine X can be sold for $12,257 and machine Y can be sold for 13,033. The Company's MARR is 10%, and its marginal tax rate is 35%....
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT