Question

In: Accounting

1. BTC uses the cost formula Y = $5,300 + $0.60X to estimate its maintenance costs...

1. BTC uses the cost formula Y = $5,300 + $0.60X to estimate its maintenance costs where X represents machine hours. If the August budget calls for 8,000 hours of planned machine time, what maintenance cost is expected to be incurred during August?

2. MCK bases its predetermined overhead rate on the estimated machine hours for the upcoming year. Its estimates for the upcoming appear below:

            Machine hours                                    52,800

            Variable manufacturing overhead      $4.10 per machine hour

            Fixed manufacturing overhead           $425,000

What is MCK's predetermined overhead rate based on these estimates?

Solutions

Expert Solution

Q. 1)

In this case X should be replaced by 8,000 hours and then the equation should be solved to get the answer.

Y = 5,300 + 0.60 × 8,000

    = 5,300 + 4,800

    = 10,100

Answer: The required cost is $10,100.

Q. 2)

Fixed overhead should be in per-hour, and then this should be added to variable rate to get the required rate.

Required rate = (Fixed overhead / Hours) + Variable overhead per hour

                        = ($425,000 / 52,800) + $4.10

                        = 8.05 + 4.10

                        = 12.15 per machine hour (Answer)


Related Solutions

Machine X costs $248,751 and has annual operating and maintenance costs of $9,980. Machine Y costs...
Machine X costs $248,751 and has annual operating and maintenance costs of $9,980. Machine Y costs $264,500 and has annual operating and maintenance cost of $5,120. Both machines are Class 39, which specifies a CCA rate of 25%. The company needs the machines for 11 years, and at the end of year 11 machine X can be sold for $12,257 and machine Y can be sold for 13,033. The Company's MARR is 10%, and its marginal tax rate is 35%....
Ferry Chemical uses a standard cost system to account for the costs of its production of...
Ferry Chemical uses a standard cost system to account for the costs of its production of Chemical X. Standards are 3.0 gallons of materials at $121 per gallon and 26 hours of labor at a standard wage rate of $28. During September, Ferry Chemical produced 3,250 gallons of Chemical X. Ferry Chemical purchased and used totaled 3,730 gallons at a total cost of $455,180. Payroll totaled $318,730 for 26,230 hours worked. a. Calculate the direct materials price variance. (Do not...
11. Regent Corp. uses a standard cost system to account for the costs of its one...
11. Regent Corp. uses a standard cost system to account for the costs of its one product. Materials standards are 2.8 pounds of material at $13 per pound, and labor standards are 4 hours of labor at a standard wage rate of $10. During July Regent Corp. produced 3,280 units. Materials purchased and used totaled 10,050 pounds at a total cost of $132,050. Payroll totaled $147,380 for 13,240 hours worked.    a. Calculate the direct materials price variance. (Do not round...
Viking Corp. uses a standard cost system to account for the costs of its one products....
Viking Corp. uses a standard cost system to account for the costs of its one products. Material standards are 13 pounds of material at $1.30 per pound and 3 hours of labor at a standard wage rate of $13.4. During November, Viking Corp. produced and sold 2,400 units. Material purchases totaled 31,470 pounds at a total cost of $41,421. Material usage totaled 31,290 pounds. Payroll totaled $97,282 for 7,430 hours worked. Viking Corp. does not maintain inventories other than direct...
 Estimate a Total Benefit and Total Cost formula for your product. In Excel, produce a...
 Estimate a Total Benefit and Total Cost formula for your product. In Excel, produce a chart that shows both functions with 50 data points (i.e. A=1…50). You decide what is A in your case (i.e. number of workers, hours of labor, etc. This is important because is going to determine your costs and profit).
How is this formula for βˆ 1 related to the formula for cov(X, Y )  Express the...
How is this formula for βˆ 1 related to the formula for cov(X, Y )  Express the formula for βˆ 1 as a function of the cov(X, Y )
The Leonard Company uses standard costs in its factory.   The standard cost to produce one unit...
The Leonard Company uses standard costs in its factory.   The standard cost to produce one unit is as follows:                Direct materials (1 g × $32/g)                                                   $32                Direct labor (1.5 hours x $20 per hour)                                       30                Variable overhead (1.5 direct labour hours x $10 per hour)       15                Fixed Overhead (1.5 direct labour hours x $16 per hour)           24                                                                                                                 $101 Standards are based on normal monthly production involving 9,000 direct labor hours...
West Manufacturing Company uses a standard cost system in its accounting records. The standard costs for...
West Manufacturing Company uses a standard cost system in its accounting records. The standard costs for its one product are as follows:                      Materials                                    8 pounds at $1.00 =   $ 8.00                      Direct labor                              1.2 hours at $14.00 =     16.80                      Variable overhead     1.2 direct-labor hours at $4.00 =       4.80                      Fixed overhead         1.2 direct-labor hours at $6.00 =       7.20                      Total standard cost                                                      $36.80             The standard costs per unit are based on normal capacity of 3,600 direct-labor...
Pristine Painting Services uses a job order cost system to collect the costs of its home...
Pristine Painting Services uses a job order cost system to collect the costs of its home painting business. Each customer’s house is treated as a separate job. Overhead is applied to each job based on the number of painting hours required for each house. Listed below are the data for the current year:                                     Estimated overhead               $780,000                                     Actual overhead                      $772,450                                     Estimated painting hours            39,000                                     Actual painting hours                  38,750 The company uses Operating Overhead in...
1. Kansas Company uses a job costing accounting system for its production costs. The company uses...
1. Kansas Company uses a job costing accounting system for its production costs. The company uses a predetermined overhead rate based on direct labor-hours to apply overhead to individual jobs. The company prepared an estimate of overhead costs at different volumes for the current year as follows: Direct labor-hours 150,000 180,000 210,000 Variable overhead costs $ 900,000 $ 1,080,000 $ 1,260,000 Fixed overhead costs 666,000 666,000 666,000 Total overhead $ 1,566,000 $ 1,746,000 $ 1,926,000 The expected volume is 180,000...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT