high low method machine hours

Atlanta Inc which uses the high-low method to analyze cost behavior has determined that machine hours best explain the companys utilities cost. High low method 1 Machine Hours Maintenance Costs Highest observation of cost.

High Low Method Calculate Variable Cost Per Unit And Fixed Cost

In cost accounting the high-low method refers to the mathematical technique that is used to separate fixed and variable components that are otherwise part of the historical cost that is mixed in nature ie partially fixed and partially variable.

. Accounting questions and answers. Quarter Machine-Hours Maintenance Costs 1 1 00000 205000 2 1 20000 240000 3 1 1 0000 220000. 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 2 140000 280000 280000 0 or.

Using the high-low method develop an estimate of variable electricity costs per machine hour. It is the process of collecting recording analyzing the cost summarizing cost. Month Direct Labor Hours Maintenance Cost January 1700 14300.

Find the fixed cost 3. Howard collects the following data on machine hours worked and maintenance costs for the past 12 quarters. So basically Total cost equation is given by 23125x 140625.

High low method 1 machine hours maintenance costs. Course Title ACC 211. Using the high-low method develop a cost function for monthly electricity costs.

Estimate electricity costs for a month in which 3000 machine hours are. Quarter Work hours Cost 1 15000 4000000 2 20000 4800000 3 18000 4400000 4 21000 5000000. Fixed Cost Lowest Activity Cost Variable Cost Per Units Lowest Activity Units Fixed cost 3210 23125 78 Fixed Cost 140625.

High Low Method of Machine Hours 8000 10000 11000 9000 14000 12000 Total Maintenance Costs 600000 640000 800000 700000 900000 870000 Required. In the given question the high cost is 3600 and the low cost is 2700 whereas the high machine hour is 18000 and low machine hour is 10000. Round the variable cost to the nearest cent y 1310 x 162000 Predict total overhead costs if 25 comma 00025000 nursing hours are predicted for the month.

Machine Hours Electrical Cost January 4000 3120 February 6000 4460 March 4800 3500. Use the high-low method to determine the hospitals cost equation using nursing hours as the cost driver. The companys cost and machine hour usage data for the first six months of the year follow.

High Low Method is a mathematical technique used to determine the fixed and variable elements of historical costs that are partially fixed and partially variable. Fixed cost 105450 7497 x 1000 30480. State the cost function 4.

Make certain to match the dates of the machine hours to the electrical meter reading dates. The company wants to know the rate at which its electricity cost changes when the number of machine hours change. 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.

Battle Company which uses the high low method to analyze cost behavior has determined that machine hours bent predict the comparys total lines cost. Using the high-low method develop an estimate of fixed electricity costs per month. Recent data are shown below.

11000 76000 58000 66000. Solve Y if x 13000 machine hours. The high-low method comprises the highest and the lowest level of activity and comparison of the.

The organization increments salaries and wages by 10 at the start of the 3rd. The total predicted overhead costs for the month is 489500. Lets begin by determining the formula that is used to calculate the variable cost slope.

School The University of Queensland. Use High and low method to estimate Variable cost per unit 2. 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.

To illustrate the high-low method lets assume that an organization had total costs of electricity of 18000 within the month when its highest activity was 120000 machine hours. In cost accounting a way of attempting to separate out fixed and variable costs given a limited amount of data. Plant activity is best measured by direct labor hours.

Assume that the cost of electricity at a small manufacturing facility is a mixed cost since the company has only one electricity meter for air quality cooling lighting and for its production equipment. Ken Howard financial analyst at KMW Corporation is examining the behavior of quarterly maintenance costs for budgeting purposes. Using either the high or low activity cost should yield approximately the same fixed cost value.

Pages 55 Ratings 100 3 3 out of 3 people found this document helpful. The high low method is a simple technique for computing the variable cost rate and the total amount of fixed coststhat are part of mixed costs mixed costs are costs. It is a nominal difference and choosing either fixed cost for our cost model will suffice.

Since you have the total cost equation now you can use this to. HIGH-LOW METHOD Key Terms and Concepts to Know Variable Fixed and Mixed Costs. The high-low method involves taking the highest level of activity.

11 Barkoff Enterpeises which uses the high-low method to analye determined that machine hours best A. Where x is the number of burgers sold in a particular month. Based on the following information calculate fixed costs per month using the high-low method.

A manufacturing company estimates semi-variable costs by using the high-low method with machine hours as the cost driver. Example of High-Low Method. Note that our fixed cost differs by 635 depending on whether we use the high or low activity cost.

Click the icon to view the data Read the requirements 12 Cm. Machine Hours 22000 32000 26000 24000 Cost 56000 May June July August Oa.

High Low Method Calculate Variable Cost Per Unit And Fixed Cost