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leva [86]
3 years ago
8

Adriana Corporation manufactures football equipment. In planning for next year, the managers want to understand the relation bet

ween activity and overhead costs. Discussions with the plant supervisor suggest that overhead seems to vary with labor-hours, machine-hours, or both. The following data were collected from last year's operations. MonthLabor-HoursMachine-HoursOverhead Costs 1 3,625 6,775 $513,435 2 3,575 7,035 518,960 3 3,400 7,600 549,575 4 3,700 7,265 541,400 5 3,900 7,955 581,145 6 3,775 7,895 572,320 7 3,700 6,950 535,110 8 3,625 6,530 510,470 9 3,550 7,270 532,195 10 3,975 7,725 565,335 11 3,375 6,490 503,775 12 3,550 8,020 564,210 Required: a. Use the high-low method to estimate the fixed and variable portions of overhead costs based on machine-hours. b. Managers expect the plant to operate at a monthly average of 7,500 machine-hours next year. What are the estimated monthly overhead costs, assuming no inflation
Business
1 answer:
irga5000 [103]3 years ago
5 0

Answer:

Adriana Corporation

Using the High and Low method the Variable and Fixed portions of the Total Cost is:

Fixed Costs = $247,420

Variable Costs = $39.50 Per unit x 8,020 Machine Hours = $316,790

B. at an average of 7,500hrs Machine hours, the estimated Overhead costs = $247,420 x (39.50 x 7,500)

= $543,670

Explanation:

The High and Low Method is a costing method which attempts to split the mix of Fixed and Variable costs in a mixed Total cost of production by looking at one element of variability (in this case Machine Hours)

It is a subjective approach, however simple to calculate. Other method is the regression analysis, which is more complex in comparison to the high and Low

The attached excel file shows how we derived the Variable and Fixed Costs element of the Overhead Costs

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Download xlsx
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Answer:

A. Money Market checking account

Explanation:

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4 0
3 years ago
Honduras is a small economy in central america. it keeps a fixed exchange rate with the us. capital is perfectly mobile. you may
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Answer:

Given that Honduras is a small economy in Central America, and it keeps a fixed exchange rate with the US, and capital is perfectly mobile, but interest rates are three percent in the US and six percent in Honduras, the explanation of the difference in these interest rates are as follows:

Honduras has a higher interest rate, meaning that its sovereign bonds pay higher values than the American ones, as well as its banks also pay higher interests on their investments compared to American banks.

This is so for a double reason: on the one hand, because the Honduran economy is less reliable than the American economy, which is larger and therefore more solvent and capable of overcoming eventual crises, with which the risk of default is less.

On the other hand, the Honduran economy is more dependent on foreign investment, so it must offer higher interest rates to attract such investments.

5 0
2 years ago
A metallurgical engineer decides to set aside money for his newborn daughter's college education. He estimates that her needs wi
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Answer:

what should be the size of each deposit, if the account earns interest at a rate of 8% per year?

$2477,81

Explanation:

% N Monthly          % VF

1,08 0 2477,81117 1,00 2.477,81

1,08 1 2477,81117 1,08 2.676,04

1,08 2 2477,81117 1,17 2.890,12

1,08 3 2477,81117 1,26 3.121,33

1,08 4 2477,81117 1,36 3.371,03

1,08 5 2477,81117 1,47 3.640,72

1,08 6 2477,81117 1,59 3.931,97

1,08 7 2477,81117 1,71 4.246,53

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1,08 11 2477,81117 2,33 5.777,36

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                 -20.000,00

                 -20.000,00

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4 0
3 years ago
Mullineaux Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Its cost of equity is 16 p
alexira [117]

Answer:

The company WACC is 13.30%

Explanation:

For computing the WACC, first we have to find the weight-age of both debt and equity.

Since in the question, the weightage of debt and equity is given which is equals to

Debt = 30%

And, Equity or common stock = 70%

So, we can easily compute the WACC. The formula is shown below

= Weighted of debt × cost of debt × (1- tax rate) + Weighted of equity × cost of equity

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6 0
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Answer:

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Explanation:

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ALTERNATIVE B: INCREASE OR (DECREASE) IN NET INCOME

Cost to buy new machine                                                   $119,000

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Reduction in variable manufacturing costs = 4*($33500 - $10300) = $92,800

Total change in net income                                                $21,800

Therefore, Alternative A should be accepted as it is giving favourable result of $30,600

4 0
3 years ago
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