Question
In: Accounting
The following selected data were taken from the accounting records of Colorado Enterprises: Month Machine Hours...
The following selected data were taken from the accounting records of Colorado Enterprises:
| Month | Machine Hours | Manufacturing Overhead | |||||
| May | 47,000 | $ | 899,000 | ||||
| June | 60,400 | 1,134,000 | |||||
| July | 70,000 | 1,295,700 | |||||
| August | 53,000 | 982,000 | |||||
Manufacturing overhead consists of three different costs; (1) machine supplies (variable), (2) property taxes (fixed), and (3) plant maintenance (semivariable). July's overhead costs were $171,500 for machine supplies, $24,200 for property taxes, and $1,100,000 for plant maintenance.
Required:
- Determine the machine supplies and property taxes for May.
- By using the high-low method, analyze Colorado’s plant maintenance cost and calculate the monthly fixed portion and the variable cost per machine hour.
- Assume that present cost behavior patterns continue into future months. Estimate the total amount of manufacturing overhead the company can expect in September if 56,400 machine hours are worked.
For all requirements, round intermediate rate calculations to 2 decimal places and all other intermediate calculations to the nearest whole dollar. Round your final answers for "Variable plant maintenance" to 2 decimal places and all other calculations to the nearest whole dollar.
machine supplies:
property taxes:
plant maintenance in may:
variable plant maintenance:
fixed plant maintenance:
manufacturing overhead:
Solutions
Expert Solution
| Req 1. | |||||||
| Total Manufacturing oh of May | 899000 | ||||||
| Less: Machine supplies (47000*2.45) | 115150 | ||||||
| Less: Property taxes | 24200 | ||||||
| Plant maintenance cost | 759650 | ||||||
| Machine Supplies in May | 115150 | ||||||
| Property taxes in may | 24200 | ||||||
| Plnt Maintenance in May | 759650 | ||||||
| Req 2. | Maintenance | MH | |||||
| At High-July | 1100000 | 70000 | |||||
| At Low-May | 759650 | 47000 | |||||
| Change | 340350 | 23000 | |||||
| VC per MH = 340350 / 23000 = | 14.8 | per mH | |||||
| Total Fixed cost: | |||||||
| Total Plant maintenance cost | 759650 | ||||||
| Less: Variable cost (14.80*47000) | 695600 | ||||||
| Fixed cost | 64050 | ||||||
| Plant maintenance | |||||||
| variable portion | 14.8 | per MH | |||||
| Fixed portion | 64050 | ||||||
| Req 3. | |||||||
| Total cost | |||||||
| variable | Fixed | ||||||
| Machine supplies | 2.45 | ||||||
| Prperty tax | 0 | 24200 | |||||
| Maintenance | 14.8 | 64050 | |||||
| Total | 17.25 | 88250 | |||||
| Total cost C(x) = 17.25X + 88250 | |||||||
| Total Estimated cost for 56400 MH = 17.25*56400 + 88250= $1061,150 | |||||||
| Req 1. | |||||||
| Total Manufacturing oh of May | 899000 | ||||||
| Less: Machine supplies (47000*2.45) | 115150 | ||||||
| Less: Property taxes | 24200 | ||||||
| Plant maintenance cost | 759650 | ||||||
| Machine Supplies in May | 115150 | ||||||
| Property taxes in may | 24200 | ||||||
| Plnt Maintenance in May | 759650 | ||||||
| Req 2. | Maintenance | MH | |||||
| At High-July | 1100000 | 70000 | |||||
| At Low-May | 759650 | 47000 | |||||
| Change | 340350 | 23000 | |||||
| VC per MH = 340350 / 23000 = | 14.8 | per mH | |||||
| Total Fixed cost: | |||||||
| Total Plant maintenance cost | 759650 | ||||||
| Less: Variable cost (14.80*47000) | 695600 | ||||||
| Fixed cost |
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