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Advocard [28]
2 years ago
10

Manufacturing overhead consists of three different costs; (1) machine supplies (variable), (2) property taxes (fixed), and (3) p

lant maintenance (semivariable). July's overhead costs were $179,000 for machine supplies, $25,700 for property taxes, and $1,250,000 for plant maintenance.
Business
1 answer:
Andrew [12]2 years ago
5 0

Answer:

(A) machine supplies $720,000 property taxes $25,700 since it is a fixed cost (B) plant maintenance cost $1,136,000, fixed cost high level of activity $114,600, low level of activity $114,700, variable cost per machine hour $17.05 per hour (C) 25.98 per hour

Explanation:

The question is not complete here is the missing part of the questions

The following selected data were taken from the accounting records of Colorado Enterprise

Month. Machine Hours. Manufacturing overhead

May. 46,000. $899,000

June. 60,000. $1,130,000

July. 68,000. $1,274,000

August. 52,000. $980,000

Here is the solution

(A) To determine the machine supplies and property for may

899,000 - 179,000

=720,000

To calculate the property taxes, since property taxes is a fixed cost, it is not affected by increases or decreases in the volume of output. It is $25,700

(B) To determine the Maintenance cost

We calculate maintenance cost, we use the level of activity at high level

1,250,000 - ( 68,000 + 46,000)

= 1,250,000 - 114,000

= $1,136,000

To calculate the monthly fixed cost and the variable cost per machine hour

Hour. Total cost

High output. 68,000. 1,274,000

Low output. 46,000. 899,000

--------------- -----------------

22,000. 375,000

------------------- -----------------

Variable cost per machine hour

=375,000/22,000

=$17.05 Per hour

Substituting in either the high or low volume cost

High. Low

Total cost. 1,274,000. 899,000

Variable cost. 1,159,400. 784,300

----------------- ----------------

Fixed cost. 114,600. 114,700

---------------- -----------------

(C) Estimated cost of 56,000 machine hours of output

Total overhead / Total machine hour

Total overhead = machine supplies + property taxes + plant maintenance

= 179,000 + 25,700 + 1,250,000

= 1,454,700

= 1,454,700/ 56,000

= 25.976

= $25.98 per hour

Working of variable cost

68,000 × 17.05 = 1,159,400

46,000 × 17.05 = 784,300

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