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1,400+ tons
Problem A.
Moore Company needs to determine the variable utilities rate per direct
machine hour in order to estimate cost for August. Relevant
information is as follows.
Month
April
May
June
July
Machine
Hours
Worked
4,800
5,200
5,600
6,000
Utilities
Cost
$4,144
4,300
4,482
4,804
$ 70,000
90,000
A.
B.
110,000
PROBLEM C.
Fixed, Variable, and Semivariable Production Costs. Ibus Instruments Co.
developed the following regression equations to indicate costs at various
activity levels:
Direct labor
Materials
Supervision
Power
=
=
=
=
$4 per unit
$3 per unit
$5,000
$300 + $.25 per unit + $.50 per
machine hour
Factory supplies
Depreciationequipment
Depreciationbuilding
During the next period, the company anticipates production of 20,000 units
and usage of 3,000 machine hours.
Required:
8. Prepare a schedule of the production costs to be
incurred during the next period.
Problem D
North Company is making plans for the introduction of a new product,
which has a target selling price of $7 per unit. The following
estimates of manufacturing costs have been derived for 6 million
units, to be produced during the first year:
Direct material: $6,000,000
Direct labor: $2,100,000 (at $14 per hour)
Overhead costs have not yet been estimated, but monthly data on
total production and overhead for the past 12 months have been
analyzed by using least-squares regression. The major overhead
cost driver is direct labor hours, with the following results:
Computed values:
Fixed overhead cost: $3,200,000
Coefficient of independent variable: $2.25
Required:
A. Prepare the company's regression equation (Y = a + bX)
to estimate overhead.
B. Calculate the predicted overhead cost at an activity
level of 6,300,000 units.