1.As any architect, Tasha is always drinking coffee. Unfortunately one morning she spilt some coffee on...

1.As any architect, Tasha is always drinking coffee. Unfortunately one morning she spilt some coffee on some of the records of Zube Co. She asked you, Aga, her longtime accountant friend to help her find the missing numbers:

Direct materials used	$19376
Direct labour costs	?
Manufacturing overhead	?
Total manufacturing costs	$105869
Work in process, beginning	$18159
Work in process, ending	$33671
Cost of goods manufactured	?

In addition, you were also provided the following information:

Indirect materials and labour	$26981
Depreciation on administrative office	$4998
Property taxes for administrative office	$15414

What are the direct labour costs incurred and cost of goods manufactured?

2.You are given the following data for Skylar Ltd.:

	Direct Labour Hours	Overhead Costs
January	25700	$630800
February	32600	$700100
March	44819	$881656
April	37500	$720500
May	40400	$910300
June	21133	$620781
July	23700	$651000
August	39200	$759000
September	41837	$751248
October	24000	$615200
November	25200	$620100
December	30100	$654377

Using the high-low method, estimate the total overhead at a volume of 30,000 direct labour hours:

Select one:

a. $330417

b. $676657

c. $718441

d. $654377

Expert Solution

Answer 1.


Statement of Cost of Goods Manufactured
Direct Material Used	19,376.00
Direct Labor Cost - $105,869 - ($19,376 + $26,981)	59,512.00
Manufacturing Overhead - Indirect Material & Labor	26,981.00
Total Manufacturing Costs	105,869.00
Add: WIP Inventory, Beginning	18,159.00
Sub-total	124,028.00
Less: WIP Inventory, Ending	(33,671.00)
Cost of Goods Manufactured	90,357.00


Answer 2-c. $718,441

Using the High Low Method - Overhead Costs
	DLH	Overhead
Cost Driver - Highest - March	44,819	881,656.00
Cost Driver - Lowest - June	21,133	620,781.00
Difference	23,686	260,875.00

Variable Cost = $260,875 / 23,686 DLH = $11.01 per DLH (Approx.)
Fixed Cost = $881,656 - (44,819 DLH X $11.01) = $388,024.46 or say $388,024 (Approx.)
Fixed Cost = $36,000

The linear equation as Per High Low Method - Overhead Costs
Y = $388,024 + $11.01 X

Overhead Cost of 30,000 DLH:
Y = $388,024 + $11.01 X 30,000 DLH
Y = $718,440.70 or say $718,441 (Approx.)

ekkarill92 answered 1 year ago

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