Question

The following information is available regarding the total manufacturing overhead of Molsen Company for a recent four-month period. Molsen's projected August operations will require approximately 110,000 machine hours. Using the high-low method, compute total manufacturing overhead estimated for August. Group of answer choices $177,500. $187,500. $197,500. $198,000.

Answer 1

Answer:

$198,000

Explanation:

Calculation to determine what the total manufacturing overhead estimated for August is

First step is to calculate the Variable element

Variable element=($198,000 - $153,000)/(110,000 - 80,000)

Variable element=$45,000/30,000

Variable element= $1.50

Second step is to calculate the Fixed element

Fixed element=$198,000 - ($1.50 x 110,000)

Fixed element=$198,000-$165,000

Fixed element = $33,000

Now let compute total manufacturing overhead

Total manufacturing overhead=$33,000 + ($1.50 x 110,000)

Total manufacturing overhead=$33,000+$165,000

Total manufacturing overhead= $198,000

Therefore Using the high-low method, compute total manufacturing overhead estimated for August is $198,000