# ACTG 2300 Lecture 1: Notes w

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7 Feb 2017
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In-Class Review 1
ONE
1. Estimate how much of the overhead
Utilities = \$52,000 / \$40,000 = \$1.30 utility cost / machine hour
July
+Total OH = \$255,800
-Supervisor Salary = \$70,000
= Maintenance = \$185,800
-Utilities = \$91,000 (\$1.30*\$70,000)
= Maintenance Only = \$94,800
Second attempt
Utilities = \$58,500 / \$39,000 = \$1.50 utility cost / machine hour
July
+Total OH = \$244,230
-Supervisor Salary = \$41,000
= Maintenance = \$203,230
-Utilities = \$103,500 (\$1.50*\$69,000)
= Maintenance Only = \$99,730
2. High-Low Method
Machine Hours
Low May 40,000
High July 70,000
Maintenance Cost
May \$62,400
July \$94,800
Y = a + bx
(\$94,800 - \$62,400) / (70,000 - 40,000) = \$1.08 of maintenance cost per
machine hour
Y = a + bx
\$94,800 = a + \$1.08(\$70,000)
a = \$19,200
o a = fixed cost
o for every month nova is operating, they will incur \$19,200 hours in
fixed cost no matter what
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y = \$19,200 + \$1.08x
Second Attempt
Machine Hours
Low May 39,000
High July 69,000
Maintenance Cost
May \$64,630
July \$99,730
Y = a + bx
(\$99,730 - \$64,630) / (69,000 - 39,000) = \$1.17 of maintenance cost per
machine hour
Y = a + bx
\$99,730 = a + \$1.17(\$69,000)
a = \$21,070
o a = fixed cost
o for every month nova is operating, they will incur \$21,070 hours in
fixed cost no matter what
y = \$21,070 + \$1.17x
3. Total OH
Machine Hours
Low May 40,000
High July 70,000
Maintenance Cost
May \$184,400
July \$255,800
Y = a + bx
(\$255,800 - \$184,400) / (70,000 - 40,000) = \$2.38 of overhead cost per
machine hour
Y = a + bx
\$184,400 = a + \$2.38(\$40,000)
a = \$89,200
o a = fixed cost
o for every month nova is operating, they will incur \$89,200 hours in
fixed cost no matter what
y = \$89,200 + \$2.38x
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