high low method machine hours

Machine Hours Electrical Cost January 4000 3120 February 6000 4460 March 4800 3500 April 5800 5040 May 3600 2900 June 4200 3200 Required. Barkoff Enterprises which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost.

High Low Method Definition

Atlanta Inc which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost.

. Indirect materials variable 56430 pesos Rent fixed 129000 Maintenance mixed 37260. 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. Lets begin by determining the formula that is used to calculate the variable cost slope.

The Cost function will be. 300 050 X. Assuming Cosco Company uses the high - low method of analysis if machine hours are budgeted to be 20000 hours then the budgeted total maintenance cost would be expected to be.

The electricity cost which varies in relation to machine hours is 050. A 25400 B 25560. A manufacturing company estimates semi-variable costs by using the high-low method with machine hours as the cost driver.

The companys cost and machine hour usage data for the first six months of the year follow. Using either the high or low activity cost should yield approximately the same fixed cost value. High Low Method assumes a linear relationship between cost and activity which is an over simplified analysis of cost behavior.

The company has analyzed these costs at the 51300 machine-hours level of activity as follows. In cost accounting a way of attempting to separate out fixed and variable costs given a limited amount of data. Change in cost Change in volume Variable cost slope 는 - X Data table Round the variable cost to the nearest cent Using the high-low method the variable utilities cost per machine hour is 160 Machine Hours 1050 Requirement 2.

Note that our fixed cost differs by 635 depending on whether we use the high or low activity cost. Fixed cost 105450 7497 x 1000 30480. The information for 20x3 is provided below.

The high-low method involves taking the highest level of activity. Using the high-low method develop an estimate of fixed electricity costs per month. Hotlanta Inc which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost.

Determine the variable cost. High-low method is used to separate the variable and fixed cost element of a mixed cost or semi variable expense. Using the high-low methoddevelop a cost function for monthly electricity costs.

The high-low method is a simple technique for computing the variable cost rate and the total amount of fixed costs that are part of mixed costs. Using the high-low method develop an estimate of variable electricity costs per machine hour. 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.

Machine-hours Labor Costs Highest observation of cost driver 400 10000 Lowest observation of cost driver 240 6800 2. 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 cost of electricity used in a factory is likely to be a mixed cost since some of the electricity will vary with the number of machine hours while some of the.

Estimate electricity costs for a month in which 3000 machine hours are. Mixed costs are costs that are partially variable and partially fixed. Tran Company which uses the high-low method to analyze cost behavior has determined that machine hours best predict the companys total utilities cost.

Hotlanta Inc which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost. Low High Machine-hours 51300 68400 Total factory overhead costs 222690 pesos 244920 pesos-----The factory overhead costs above consist of indirect materials rent and maintenance. The highest number of machine hours was 30000 and total semi-variable costs at that level were 120000.

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. Company recorded overhead costs of 18122 at an activity level of 5200 machine hours and. The high-low method of accounting is used to estimate the total costs per unit produced by a company.

It is a nominal difference and choosing either fixed cost for our cost model will suffice. B Click the icon to view the data Read the requirements. This video provides an example of how to use the High-low Method in Managerial AccountingThe High-low Method can be used to calculate the variable cost per.

The Hunter Company uses the high-low method to estimate the cost function. 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. High Low Method is not representative of entire data as it is based on just 2 activity levels.

Variable Cost 750 - 500 900 - 400. What is the estimate of the total cost when 300 machine-hours are used. Using the high-low method of analysis estimate the variable electrical cost per machine hour.

Activity based costing can provide a more useful analysis of the behavior of cost in relation to distinct activities. Recent data are shown below. The lowest number of machine hours was 22000 and total semi-variable costs at that level were 100000.

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. Month Utilities Machine Hours January.

High Low Method In Accounting Definition Formula