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Author Question: Salter Manufacturing Company produces inventory in a highly automated assembly plant in Fall River, ... (Read 41 times)

schs14

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Salter Manufacturing Company produces inventory in a highly automated assembly plant in Fall River, Massachusetts. The automated system is in its first year of operation and management is still unsure of the best way to estimate the overhead costs of operations for budgetary purposes. For the first six months of operations, the following data were collected: 

Machine-hoursKilowatt-hoursTotal Overhead Costs
January4,5605,424,000$405,600
February4,3805,208,000404,160
March4,6805,400,000407,040
April3,9605,148,000404,160
May3,9005,040,000391,200
June3,7204,944,000384,000

Required: 
a.  Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.
b.  Use the high-low method to determine the estimating cost function with kilowatt-hours as the cost driver.
c.  For July, the company ran the machines for 4,000 hours and used 4,550,000 kilowatt-hours of power. The overhead costs totaled $365,000. Which cost driver was the best predictor for July?


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Marked as best answer by schs14 on Mar 6, 2021

welcom1000

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schs14

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Reply 2 on: Mar 6, 2021
Great answer, keep it coming :)


adf223

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

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