This document contains three problems involving using the high-low method to determine total cost formulas and costs based on production volume/machine hours for three different companies:
1) Milktopia produces bubble gum and had monthly costs and volumes over 5 months. The high-low method is used to find the total cost formula and costs for 20 and 10 cases in August.
2) Mooner accumulates utility costs based on machine hours over 10 months. The high-low method finds the total cost formula and costs for 7,000 and 4,600 hours in October.
3) Indiana Industrial's utility costs and machine hours are given for the last 6 months of 2018. The high-low method determines the cost
This document contains three problems involving using the high-low method to determine total cost formulas and costs based on production volume/machine hours for three different companies:
1) Milktopia produces bubble gum and had monthly costs and volumes over 5 months. The high-low method is used to find the total cost formula and costs for 20 and 10 cases in August.
2) Mooner accumulates utility costs based on machine hours over 10 months. The high-low method finds the total cost formula and costs for 7,000 and 4,600 hours in October.
3) Indiana Industrial's utility costs and machine hours are given for the last 6 months of 2018. The high-low method determines the cost
This document contains three problems involving using the high-low method to determine total cost formulas and costs based on production volume/machine hours for three different companies:
1) Milktopia produces bubble gum and had monthly costs and volumes over 5 months. The high-low method is used to find the total cost formula and costs for 20 and 10 cases in August.
2) Mooner accumulates utility costs based on machine hours over 10 months. The high-low method finds the total cost formula and costs for 7,000 and 4,600 hours in October.
3) Indiana Industrial's utility costs and machine hours are given for the last 6 months of 2018. The high-low method determines the cost
This document contains three problems involving using the high-low method to determine total cost formulas and costs based on production volume/machine hours for three different companies:
1) Milktopia produces bubble gum and had monthly costs and volumes over 5 months. The high-low method is used to find the total cost formula and costs for 20 and 10 cases in August.
2) Mooner accumulates utility costs based on machine hours over 10 months. The high-low method finds the total cost formula and costs for 7,000 and 4,600 hours in October.
3) Indiana Industrial's utility costs and machine hours are given for the last 6 months of 2018. The high-low method determines the cost
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PROBLEM A
Milktopia, Inc. produces and sells milk flavored bubble gum. Over the last five months, Milktopia had the following production costs and production volume.
MONTH COST VOLUME (IN CASES)
March 6,000 12 April 6,659 14 May 8,370 18 June 8,800 19 July 8,050 17
Using the high-low method, determine the:
a. Total cost formula (express it in the form: y = a + bx)
b. Total cost if the production for the month of August yields 20 cases c. Total cost if the production for the month of August yields 10 cases
PROBLEM B
Mooner Company’s manager decided to accumulate utility costs based on machine hours. The company’s cost sheet provides the following information.
Month Machine Hours Utility Cost
January 7,260 2,960 February 8,850 3,410 March 4,800 1,920 April 9,000 3,500 May 14,000 3,900 June 4,900 1,860 July 4,600 2,180 August 8,900 3,470 September 5,900 2,480 October 5,500 2,310
Using the high-low method, determine the:
a. Total cost formula (express it in the form: y = a + bx)
b. Total cost if the machine hours for the month of October is 7,000 c. Total cost if the machine hours for the month of October is 4,600 PROBLEM C
Information about Indiana Industrial’s utility cost for the last six months of 2018 follows. The high-low method will be used to develop a cost formula to predict 2019 utility charges, and the number of machine hours has been found to be an appropriate cost driver. Data for the first half of 2018 are not being considered because the utility company imposed a significant rate change since July 1, 2018.
Month Machine Hours Utility Cost
July 33,750 13,000 August 34,000 12,200 September 33,150 11,040 October 32,000 11,960 November 31,250 11,500 December 31,000 11,720
Using the high-low method:
a. What is the cost formula for the utility expense?
b. What is the budgeted utility cost for September 2019 if 31,250 machine hours are projected?
