high low method machine hours

The companys relevant range of activity varies from a low of 600 machine hours to a high of 1200 machine hours with the following data being available for the first six months of the year. Assuming Cosco Company uses the high-low method of analysis the fixed cost of maintenance would be.

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Variable utilities cost per machine hour Change in costhigh machine hour-low machine hour 4076-33881460-1030.

. Battle Company which uses the high low method to analyze cost behavior has determined that machine hours bent predict the comparys total lines cost. Use the high-low method to estimate the variable and fixed components of this cost. Variable utilities cost per machine hour 16 per machine hour.

The companys cost and machine hour usage data for the first six months of the year follow. High-Low method is one of the several mathematical techniques used in managerial accounting to split a mixed cost into its fixed and variable components. The high-low method involves taking the highest level of activity.

HIGH-LOW METHOD Key Terms and Concepts to Know Variable Fixed and Mixed Costs. Machine Hours Electrical Cost January 4000 3120 February 6000 4460 March 4800 3500. The information for 20x3 is provided below.

4 It is assumed that there is no consumption of electricity during loading and unloading time. As a result of analyzing the relationship of total factory overhead to changes in machine hours the following relationship was found. A controller is interested in analyzing the fixed and variable costs of.

Plant activity is best measured by direct labor hours. At an activity level of 8300 machine-hours in a month B Companys total variable maintenance cost is 220448 and its total fixed maintenance cost is. Hotlanta Inc which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost.

The company wants to know the rate at which its electricity cost changes when the number of machine hours change. When activityjumped to 25000 machine hours which was still within the relevant range the average total cost per machine hour was 3140. Example of High-Low Method.

Based on the following information calculate fixed costs per month using the high-low method. Recent data are shown below. Use the high-low method to determine the hospitals cost equation using nursing hours as the cost driver.

What is the estimate of the total cost when 300 machine-hours are used. Assume that the relevant range includes all of the activity levels mentioned in this problem. 2 Fixed cost Total cost-variable cost 3388-103016 Fixed cost 1740.

11000 76000 58000 66000. Month Direct Labor Hours Maintenance Cost January 1700 14300. In cost accounting a way of attempting to separate out fixed and variable costs given a limited amount of data.

A manufacturing company estimates semi-variable costs by using the high-low method with machine hours as the cost driver. The companys relevant range of activity varies from a low of 600 machine hours to a high of 1100 machine hours with the following data being available for the first six months of the year. Compute the variable component rounding off to the nearest whole cent.

2 Loading and unloading time is 10 of machine time. Period Semi-Variable Costs Machine Hours 1 100000 22000 2 120000 30000 3 96000 23600 If 29000 machine hours were budgeted for the next period estimated semi-variable costs would total A. The total predicted overhead costs for the month is 489500.

Click the icon to view the data Read the requirements 12 Cm Requirement 1. Using either the high or low activity cost should yield approximately the same fixed cost value. Given a set of data pairs of activity levels ie.

3 Effective working hours are 2160 hours 2400 10 of 2400. Assume that the cost of electricity at a small manufacturing facility is a mixed cost since the company has only one electricity meter for air quality cooling lighting and for its production equipment. It is a nominal difference and choosing either fixed cost for our cost model will suffice.

Machine Hours 22000 32000 26000 24000 Cost 56000 May June July August Oa. Quarter Work hours Cost 1 15000 4000000 2 20000 4800000 3 18000 4400000 4 21000 5000000. Fixed cost 105450 7497 x 1000 30480.

The highest and the. To solve this using the high-low method formula subtract the lower cost from the higher cost to get a numerator of 27675 then subtract the lowest number of units from the highest quantity to. 3 Total cost on 1220 Machine hour will be 1220161740 3692.

Round the variable cost to the nearest cent y 1310 x 162000 Predict total overhead costs if 25 comma 00025000 nursing hours are predicted for the month. This equation was probably found by using the mathematical techniques called. High and Low Points Method.

Note that our fixed cost differs by 635 depending on whether we use the high or low activity cost. Y bar 1000 2 x bar. The organization increments salaries and wages by 10 at the start of the 3rd.

Month Maintenance Cost Machine Hours. The Hunter Company uses the high-low method to estimate the cost function. 5 Interest has been treated as an element of cost.

High Low Method is a mathematical technique used to determine the fixed and variable elements of historical costs that are partially fixed and partially variable. 1 Total working hours per annum are 200 x 12 2400. Units labor hours machine hours etc and the corresponding total cost figures high-low method only takes two extreme data pairs ie.

Machine-hours Labor Costs Highest observation of cost driver 400 10000 Lowest observation of cost driver 240 6800 2. Machine-Hours Maintenance Costs Highest observation of cost driver 140000 280000 Lowest observation of cost driver 95000 190000 Difference 45000 90000 Maintenance costs a b Machine-hours Slope coefficient b 90000 45000 2 per machine-hour Constant a 280000 280000 0 or Constant a 190000. Uses the highlow method to analyze cost behavior.

The company observed that at 21000 machine hours of activity total maintenance costs averaged 3620 per hour. Barkoff Enterprises which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost. C 14330 d 26745 7.

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