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pentagon [3]
2 years ago
10

The controller of Sheridan Industries has collected the following monthly expense data for use in analyzing the cost behavior of

maintenance costs. Month Total Maintenance Costs Total Machine Hours January $2,735 3,620 February 3,108 4,144 March 3,730 6,216 April 4,662 8,184 May 3,315 5,180 June 4,832 8,280 (a1) New attempt is in progress. Some of the new entries may impact the last attempt grading. Your answer is incorrect. Determine the variable-cost components using the high-low method. (Round answer to 2 decimal places e.g. 2.25.) Variable cost per machine hour
Business
1 answer:
12345 [234]2 years ago
6 0

Answer:

  1. vhwi9vcehishegeievvhwi9nskekkene
  2. enmememe
  3. nenehw
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Answer:

The company's high-volume products are overcosted.

Explanation:

Vanguilder is currently using a <em>traditional costing </em>which is easy because it often just divides some types of costs equally between different items.

To understand this we take the assumption given in the question that Vanguilder combines all manufacturing overhead into a single cost pool and allocates this overhead to products by using machine hours.

So, lets say that Vanguilder is producing 2 products then how will you divide the machine hours between these 2 products?

It's Easy;

The total cost of machine hours divided by units produced and we get the $ amount for each product. But what if product 1 uses more machine hours then product 2?

Is it still fair to write down same amount of machine hours for each product.

We should write bigger machine hour cost for the product 1, right?

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However, <em>Activity Based Costing</em> finds ways to divide or allocate these costs more proportionally or fairly.

We can write a higher cost for product which use more machine hours.

Hence the following option would be correct:

<em>The company's high-volume products are overcosted. </em>

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