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pantera1 [17]
3 years ago
14

Given the following cost and activity observations for Smithson Company’s utilities, use the high-low method to calculate Smiths

on’s fixed costs per month. Do not round intermediate calculations.
Cost Machine Hours
January $52,200 20,000
February 75,000 29,000
March 57,000 22,000
April 64,000 24,500

a. $2,530
b. $22,800
c. $1,600
d. $50,600
Business
1 answer:
Tema [17]3 years ago
7 0

Answer:

c. $1,600

Explanation:

Using high low method we have

Highest cost = $75,000 for 29,000 hours in the month of February.

Lowest Cost = $52,200 for 20,000 hours in the month of January.

Variable Cost per unit = \frac{Change \: in \: cost}{Change \: in \: hours} = \frac{75,000 - 52,200}{29,000 - 20,000}  = $2.533

Or

$52,200 = 20,000 V + F

$75,000 = 29,000 V + F

$22,800 = 9,000 V

$2.53 = V

20,000 V = $50,600

$52,200 - $50,600 = $1,600

Fixed Cost = $1,600

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6 0
1 year ago
Kristi's Pottery sold 200 tiles at $25.00 each to a charge customer, terms 1/10, n/30. Which entry is required to record this tr
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4 0
3 years ago
Read 2 more answers
The balance in the prepaid insurance account before adjustment at the end of the year is $27,000. Journalize the adjusting entry
Radda [10]

Answer:

(A)  Debit Insurance expense $20,250

     Credit Prepaid insurance $20,250

     Being entries to recognize insurance amortization expense for the year.

(B)  Debit Insurance expense $20,250

     Credit Prepaid insurance $20,250

     Being entries to recognize insurance amortization expense for the year.

Explanation:

Prepaid insurance account before adjustment = $27,000

(A) the amount of insurance expired during the year is $20,250

To account  for the expired amount,

Debit Insurance expense $20,250

Credit Prepaid insurance $20,250

Being entries to recognize insurance amortization expense for the year.

(B) the amount of unexpired insurance applicable to future periods is $6,750

Amount expired = $27,000 - $6,750

                           = $20,250

To account  for the expired amount such that the amount of unexpired insurance applicable to future periods is $6,750,

Debit Insurance expense $20,250

Credit Prepaid insurance $20,250

Being entries to recognize insurance amortization expense for the year.

4 0
3 years ago
A company had service revenue of $257,000, rent expense of $10,700, utility expense of $4,200, salary expense of $19,200, deprec
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Answer:

Income summary has a $208,630 credit balance before being closed

Explanation:

The closing entries should be:

Dr Service revenue 257,000

    Cr Income summary 257,000

Dr Income summary 48,370

    Cr Rent expense 10,700

    Cr Utility expense 4,200

    Cr Salary expense 19,200

    Cr Depreciation expense 9,700

    Cr Advertising expense 4,570

Income summary

Debit               Credit

<u>18,370             257,000</u>

                       208,630

In order to close income summary:

Dr Income summary 208,630

    Cr Retained earnings 208,630

If you want to close dividends:

Dr Retained earnings 18,700

    Cr Dividends 18,700

7 0
3 years ago
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