Asked by Maryana Bilska on May 11, 2024
Verified
If Casablanca expects to incur 185,000 machine hours next month, what will the estimated total overhead cost be using the high-low method?
A) $212,750
B) $359,750
C) $382,750
D) $381,700
Overhead Cost
Expenses related to the day-to-day running of a business that cannot be directly tied to a specific product or service, such as rent, utilities, and administrative salaries.
Machine Hours
This is a measure of the amount of time a machine is operated and is often used in the allocation of manufacturing overhead to products based on usage.
High-low Method
A method employed in managerial accounting that estimates variable and fixed costs by analyzing the most and least active periods.
- Forecast future expenditures or costs utilizing provided data.
Verified Answer
Fixed cost element = Total cost - Variable cost element
= $400,000 - ($1.15 per MH × 200,000 MHs)= $170,000
Y = a + bX = $170,000 + ($1.15 per MH × 185,000 MHs)= $382,750
Learning Objectives
- Forecast future expenditures or costs utilizing provided data.
Related questions
What Would Be the Competitor's Prediction of Total Expected Costs ...
From the Following List of Costs, Calculate the Amount of ...
Tos Corporation's Flexible Budget Cost Formula for Indirect Materials, a ...
Bluemel Air Uses Two Measures of Activity, Flights and Passengers ...
Dunbar Footwear Corporation's Flexible Budget Cost Formula for Supplies, a ...