ACC 406 Lecture Notes - Lecture 5: Operating Leverage, Fixed Cost, Contribution Margin
18 Apr 2016
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Lentz manufacturers, a manufacturer of wood doors, has the following records for the year: Required: calculate the following for the year: direct materials used, direct labour c. d, conversion cost. The following data have been taken from the accounting records of secon corporation for the just completed year. Selected data about theay company"s manufacturing operations at two levels of activity are given below: Required: using the high-low method, estimate the cost formula for manufacturing overhead. Assume that both direct material and direct labor are variable costs. Less: direct materials ( x 10,000 and x 15,000, respectively) Direct labor ( x 10,000 and x 15,000, respectively) $ 60,000 $ 90,000. Change $ 18,000 5,000 units variable cost: ,000 5,000 units = . 60 per unit. Total cost at the high level of activity. Less: variable element (. 60 x 15,000 units) $ 54,000. Therefore, the cost formula for manufacturing overhead is ,000 per period plus . 60 per unit produced or.
