Question

In: Accounting

Swifty Corporation’s high and low level of activity last year was 66000 units of product produced...

Swifty Corporation’s high and low level of activity last year was 66000 units of product produced in May and 26000 units produced in November. Machine maintenance costs were $239400 in May and $103400 in November. Using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 49000 units.

Expert Solution

High Low Method

Under High-low method, the variable cost per unit is estimated by dividing the difference of cost at highest and lowest level of activity by the difference in highest and lowest level of activity.

Variable Cost per Unit = Difference in Cost at Highest and Lowest Activity Level / Difference of highest and lowest activity level

= ($239,400 – 103,400) / (66,000 – 26,000)

= $136,000 / 40,000 Units

= $3.40 per unit

Fixed Cost can be calculated by putting variable cost per unit at highest or lowest activity.

Total Cost at highest level of activity = Total variable cost + total fixed cost = $239,400

Total Variable Cost (66,000 Units * $3.40) + Fixed Cost = $239,400

$224,400 + Fixed Cost = $239,400

Fixed Cost = $239,400 – 224,400 = $15,000

Total maintenance cost for a month in which production is expected to be 49000 units.

Total Maintenance Cost = Fixed Cost $15,000 + Variable Cost (49,000 Units * $3.40)

= $15,000 + $166,600

= $181,600

Hope the above calculations, working and explanations are clear to you and help you to understand the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

ekkarill92 answered 2 years ago

Coronado Industries’s high and low level of activity last year was 52000 units of product produced...

Coronado Industries’s high and low level of activity last year was 52000 units of product produced in May and 21000 units produced in November. Machine maintenance costs were $147200 in May and $66600 in November. Using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 45000 units. a) $135100 b) $135200 c) $126000 d) $129000

18. Madison Company's high and low level of activity last year was 60,000 units of product...

18. Madison Company's high and low level of activity last year was 60,000 units of product produced in May and 20,000 units produced in November. Machine maintenance costs were $104,000 in May and $50,000 in November. Using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 45,000 units. Select one: A. $78,000 B. $112,000 C. $83,750 D. $60,750 E. None of the above. 21. Paul Company sells MP3 players...

At an activity level of 8,400 units in a month, Braughton Corporation’s total variable maintenance and...

At an activity level of 8,400 units in a month, Braughton Corporation’s total variable maintenance and repair cost is $697,284 and its total fixed maintenance and repair cost is $464,100. What would be the total maintenance and repair cost, both fixed and variable, at an activity level of 8,500 units in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.) Multiple Choice $1,168,297 $1,175,210 $1,161,384 $1,169,685 ***************************************************************************8 Wages paid...

Last year, ABC Company produced 19,000 units of Product X. The fixed overhead budget was $160,000...

Last year, ABC Company produced 19,000 units of Product X. The fixed overhead budget was $160,000 and the expected level of production for the year was 20,000 units. The actual fixed overhead costs were $162,000. Required: Be sure to label each variance as F – favorable or U – unfavorable. 1. What is the predetermined fixed overhead rate for the year? 2. What was the fixed overhead budget or spending variance? 3. What is the fixed overhead volume variance?

Using the high-low method, Vogel Corp. has $90,000 of mixed costs for 31,000 units produced in...

Using the high-low method, Vogel Corp. has $90,000 of mixed costs for 31,000 units produced in June and $83,000 for 27,000 units produced in October. Vogel's variable cost per unit (to the nearest penny) is:

Swifty Corporation had a beginning inventory of 120 units of Product RST at a cost of...

Swifty Corporation had a beginning inventory of 120 units of Product RST at a cost of $7 per unit. During the year, purchases were: Feb. 20 630 units at $8 Aug. 12 445 units at $10 May 5 535 units at $9 Dec. 8 120 units at $11 Swifty uses a periodic inventory system. Sales totaled 1,500 units. The cost of goods available for sale 16465 Average Cost 8.9 Determine the ending inventory and the cost of goods sold under...

Last year Strimmenos Inc. budgeted for production and sales of 9,000 units. The company actually produced...

Last year Strimmenos Inc. budgeted for production and sales of 9,000 units. The company actually produced and sold 8,640 units. Each units has a standard requiring 0.5 pounds of materials at a budgeted cost of $2.33 per pound and 1.36 hours of assembly time at a cost of $8.95 per hour. The items sell for $165 each. Actual cost for the production of 8,640 units included 4,538 pounds of materials at $2.3 per pound and $109,400 for labor at $9.24...

Describe the level of financial leverage used by Microsoft (high, medium, or low).Is that level of...

Describe the level of financial leverage used by Microsoft (high, medium, or low).Is that level of leverage an advantage or disadvantage to the company? Explain your answer.

Last year Minden Company introduced a new product and sold 25,900 units of it at a...

Last year Minden Company introduced a new product and sold 25,900 units of it at a price of $100 per unit. The product's variable expenses are $70 per unit and its fixed expenses are $836,100 per year. Required: 1. What was this product's net operating income (loss) last year? 2. What is the product's break-even point in unit sales and dollar sales? 3. Assume the company has conducted a marketing study that estimates it can increase annual sales of this...

Last year Minden Company introduced a new product and sold 25,200 units of it at a...

Last year Minden Company introduced a new product and sold 25,200 units of it at a price of $92 per unit. The product's variable expenses are $62 per unit and its fixed expenses are $838,500 per year. Required: 1. What was this product's net operating income (loss) last year? 2. What is the product's break-even point in unit sales and dollar sales? 3. Assume the company has conducted a marketing study that estimates it can increase annual sales of this...