In: Accounting
The cafeteria at X Company has the following cost and activity information for the first five months of 2019: Month Cost Meals January $29,379 7,200 February 31,157 7,636 March 31,787 7,790 April 34,059 9,000 May 31,057 7,611 Using the high-low method with this data, estimate the total cafeteria cost in December, when 9,600 meals are expected to be served [round variable costs per unit to two decimal places].
Total Factory Overhead cost | ||
No. of meals | Meal cost | |
High level of activity | 9,000 | $34,059 |
Low level of activity | 7,200 | $29,379 |
Change | 1,800 | $4,680 |
Variable maintainance cost per meal =$4,680 / 1,800 meals =$2.60 per meal | ||
Fixed cost element =$34,059 - (9,000 meals*$2.60) | ||
Fixed cost element =$34,059 - $23,400 =$10,659 | ||
Y =$10,659 + $2.60X | ||
Total Factory Overhead cost =$10,659 + 9,600*$2.60 =$35,619 |