Question

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

  Month Direct-Labor
Hours Manufacturing
Overhead
  January 37,000       $ 753,500
  February 36,000       737,000
  March 39,000       798,000
  April 34,000       698,000
  May 41,000       801,000
  June 46,000       896,000

June’s costs consisted of machine supplies ($248,400), depreciation ($31,000), and plant maintenance ($616,600). These costs Exhibit the following respective behavior: variable, fixed, and semivariable.

     The manufacturing overhead figures presented in the preceding table do not include supervisory
labor cost, which is step-fixed in nature. For volume levels of less than 15,000 hours, supervisory labor amounts to $76,000. The cost is $152,000 from 15,000–29,999 hours and $228,000 when activity
reaches 30,000 hours or more.

Required:

1.

Determine the machine supplies cost and depreciation for April.

         

2.

Using the high-low method, calculate the variable cost per direct-labor hour and fixed cost per month for the Company’s plant maintenance cost. (Round your variable cost per direct-labor hour to 2 decimal places.)

         

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 October if 29,600 direct-labor hours are worked.

Answer 1