Question

In: Accounting

Rio Bus Tours has incurred the following bus maintenance costs during the recent tourist season. (The...

Rio Bus Tours has incurred the following bus maintenance costs during the recent tourist season. (The real is Brazil’s national monetary unit. On the day this exercise was written, the real was equivalent in value to .269 U.S. dollar.)

Month Miles Traveled by Tour Buses Cost
November 15,000 18,600 real
December 17,400 18,900
January 19,800 19,050
February 24,000 19,500
March 31,500 20,880
April 13,500 18,000


Required:

1. Use the high-low method to estimate the variable cost per tour mile traveled and the fixed cost per month.

2. Develop a formula to express the cost behavior exhibited by the company’s maintenance cost.

3. Predict the level of maintenance cost that would be incurred during a month when 44,000 tour miles are driven.

Solutions

Expert Solution

1)

Using the high-low method ,

variable cost per unit=(total cost of highest activity level-total cost of lowest activity level)/(highest activity level-lowest activity level)

highest activity level=31500

lowest activity level=13500

total cost of highest activity level=20880

total cost of lowest activity level=18000

variable cost per unit=(20880-18000)/(31500-13500)=0.16 real

total fixed cost=total cost-total variable cost

apply this to the highest activity level

total cost for highest activity level=20880

total variable cost for highest activity level=0.16*31500=5040 real

total fixed cost=20880-5040=15840 real

2)

formula to express the cost behavior is y=15840+0.16x

y is the total cost for any activity level

15840 real is the fixed cost for any activity level

0.16x is the total variable cost for any activity level,x is the activity level

3)

maintenance cost that would be incurred during a month when 44,000 tour miles are driven is 22840 real

y=15840+0.16x

here x=44000

y=15840+(0.16*44000)=22840 real

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

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...
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...
During the current year, KB has the following costs: Utility Costs for Home $2,500 Maintenance and...
During the current year, KB has the following costs: Utility Costs for Home $2,500 Maintenance and Repairs for Home 3,100 Property Taxes for Home 5,400 House Insurance 1,300 Interest on Mortgage 4,600 Home Telephone Monthly Charge 600 Separate Line to Home-Work-Space Monthly Charge 480 Employment Related Long Distance Charges 560 Home Internet Service Fees 720 KB estimates that he/she uses 18 percent of his residence and 30 percent of his home internet service for employment/business related purposes. Maximum CCA on...
Kuwait Dental Clinic has incurred the following overhead costs during the past year.
Kuwait Dental Clinic has incurred the following overhead costs during the past year.MonthNumber ofDental testsOverhead costs (Y)MonthNumber ofDental testsOverhead costs (Y)January            9,800173,500July13,000190,200February6,000155,200August9,500171,900March6,800169,100September9,500173,400April7,500170,400October8,700170,800May9,200172,300November14,000195,200June10,200175,900December13,500198,800Required: Use the high-low method,What is the variable overhead costs per one test?What is the total fixed overhead costs of the Clinic?Predict the level of Clinic’s overhead costs that would be incurred during a month when 17,000 tests are taken.A-AnswerB-AnswerC-Answer
Q1. Bayblo has incurred the following costs to make 200,000 units during the month of December....
Q1. Bayblo has incurred the following costs to make 200,000 units during the month of December. Rials Materials 500,000 Direct labor 200,000 Variable manufacturing overhead 60,000 Variable selling and administrative costs 90,000 Fixed manufacturing overhead 400,000 Fixed selling and administrative costs 400,000 Bayblo’s December 1st inventory consisted of 20,000 units valued at RIALS 116,000 using absorption costing. Total fixed costs and variable costs per unit have not changed during the past few months. In December, Bayblo sold 210,000 units at...
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...
Sobota Corporation has provided the following partial listing of costs incurred during August: Marketing salaries $...
Sobota Corporation has provided the following partial listing of costs incurred during August: Marketing salaries $ 54,500 Property taxes, factory $ 12,500 Administrative travel $ 103,400 Sales commissions $ 53,800 Indirect labor $ 43,700 Direct materials $ 171,900 Advertising $ 140,300 Depreciation of production equipment $ 41,400 Direct labor $ 93,400 a. What is the total amount of product cost listed above? b. What is the total amount of period cost listed above?
Sobota Corporation has provided the following partial listing of costs incurred during August:   Marketing salaries $...
Sobota Corporation has provided the following partial listing of costs incurred during August:   Marketing salaries $ 47,100      Property taxes, factory $ 15,000      Administrative travel $ 105,300      Sales commissions $ 57,300      Indirect labor $ 46,100      Direct materials $ 168,200      Advertising $ 140,000      Depreciation of production equipment $ 41,500      Direct labor $ 95,900    Required: a. What is the total amount of product cost listed above?       b. What is the total amount of...
Sobota Corporation has provided the following partial listing of costs incurred during August:   Marketing salaries $...
Sobota Corporation has provided the following partial listing of costs incurred during August:   Marketing salaries $ 51,900      Property taxes, factory $ 10,300      Administrative travel $ 105,000      Sales commissions $ 52,400      Indirect labor $ 44,100      Direct materials $ 172,600      Advertising $ 144,000      Depreciation of production equipment $ 48,300      Direct labor $ 94,500    Required: a. What is the total amount of product cost listed above? Total product cost __________       b. What is...
Kuwait Dental Clinic has incurred the following overhead costs during the past year. Month Number of...
Kuwait Dental Clinic has incurred the following overhead costs during the past year. Month Number of Dental tests Overhead costs (Y) Month Number of Dental tests Overhead costs (Y) January             9,800 173,500 July 13,000 190,200 February 6,000 155,200 August 9,500 171,900 March 6,800 169,100 September 9,500 173,400 April 7,500 170,400 October 8,700 170,800 May 9,200 172,300 November 14,000 195,200 June 10,200 175,900 December 13,500 198,800 Required: Use the high-low method, What is the variable overhead costs per one test?...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT