Mansah Co., Ltd., of Ghana is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Level of Activity Low High Direct labor-hours 56,100 74,800 Total factory overhead costs $ 276,310 $ 315,580 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 56,100-hour level of activity as follows: Indirect materials (variable) $ 95,370 Rent (fixed) 130,000 Maintenance (mixed) 50,940 Total factory overhead costs $ 276,310 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $315,580 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $315,580 consists of indirect materials and rent. Think about the behavior of variable and fixed costs
Mansah Co., Ltd., of Ghana is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Level of Activity Low High Direct labor-hours 56,100 74,800 Total factory overhead costs $ 276,310 $ 315,580 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 56,100-hour level of activity as follows: Indirect materials (variable) $ 95,370 Rent (fixed) 130,000 Maintenance (mixed) 50,940 Total factory overhead costs $ 276,310 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $315,580 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $315,580 consists of indirect materials and rent. Think about the behavior of variable and fixed costs
Related questions
Verizox Company uses a job order cost system with manufacturingoverhead applied to products based on direct labor hours. At thebeginning of the most recent year, the company estimated itsmanufacturing overhead cost at $300,000. Estimated direct laborcost was $400,000 for 20,000 hours.
| Actual costs for the most recent month aresummarized here: |
| ItemDescription | Total Cost | |
| Direct labor (1,500 hours) | $ | 33,000 |
| Indirect costs | ||
| Indirect labor | 4,500 | |
| Indirect materials | 2,500 | |
| Factory rent | 4,200 | |
| Factory supervision | 4,700 | |
| Factory depreciation | 5,600 | |
| Factory janitorial work | 1,200 | |
| Factory insurance | 2,600 | |
| General and administrativesalaries | 3,100 | |
| Selling expenses | 2,300 | |
| Required: | |
| 1. | Calculate the predetermined overhead rate. |
| 2. | Calculate the amount of applied manufacturing overhead. |
| 3. | Calculate actual manufacturing overhead costs. |
| 4. | Compute over- or underapplied overhead. (Input theamount as positive value.) |
Verizox Company uses a job order cost system with manufacturingoverhead applied to products based on direct labor hours. At thebeginning of the most recent year, the company estimated itsmanufacturing overhead cost at $168,350. Estimated direct laborcost was $458,800 for 18,500 hours. |
| Actual costs for the most recent month aresummarized here: |
| ItemDescription | Total Cost | |
| Direct labor (1,850hours) | $ | 45,881 |
| Indirect costs | ||
| Indirect labor | 2,530 | |
| Indirect materials | 3,390 | |
| Factory rent | 3,360 | |
| Factory supervision | 4,860 | |
| Factory depreciation | 5,630 | |
| Factory janitorial work | 1,280 | |
| Factory insurance | 1,790 | |
| General and administrativesalaries | 4,180 | |
| Selling expenses | 5,380 | |
| Required: | |
| 1. | Calculate the predetermined overhead rate. (Round youranswer to 2 decimal places.) |
| 2. | Calculate the amount of applied manufacturing overhead. |
| 3. | Calculate actual manufacturing overhead costs. |
| 4. | Compute over- or underapplied overhead. |
