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-hours | Kilowatt-hours | Total Overhead Costs |
| January | 4,560 | 5,424,000 | $405,600 |
| February | 4,380 | 5,208,000 | 404,160 |
| March | 4,680 | 5,400,000 | 407,040 |
| April | 3,960 | 5,148,000 | 404,160 |
| June | 3,720 | 4,944,000 | 384,000 |
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?
Plant
Plant
Plant
The rotating assembly for a V-8 engine that has eight pistons and connecting rods and one ...
Cross section of a typical port fuel-injection nozzle assembly. These injectors are serviced as an ...
Connections of a nitric acid plant, intermediate pressure type