60%(87)52 out of 87 people found this document helpful
This preview shows page 7 - 8 out of 8 pages.
6. (TCO 9) Herbart Company gathered the following information on power costs and factory machine usage for thelast 6 months.Power CostFactory Machine HoursJanuary$24,40013,900February30,30017,600March29,00016,800April22,34013,200May19,90011,600June14,900
6,600Using the high-low method of analyzing costs, answer the following questions and show computations to support youranswers.Part (a): What is the estimated variable portion of power costs per factory machine hour?Part (b): What is the estimated fixed power cost each month?Part (c): If it is estimated that 10,000 factory machine hours will be run in July, what is the expected total power costfor July? (Points : 30)2. (TCO 9) Understanding how costs behave can help managers plan operations and choose between variouscourses of action.Part (a): Identify and describe the three types of cost behavior, including examples of each.Part (b): As a manager, which cost behavior would you prefer and why? (Points : 20)1. (TCO 7) At Lakeside Manufacturing, budgets are the responsibility of everyone. Each department collaborates indetermining its expected needs, and sales personnel determine the likely sales volume. Al Talbott, one of theproduction managers, believes in building plenty of slack into everything, including his estimates of ending inventoryof work in process. As the accounting manager, write a memo to Mr. Talbott, explaining why the ending inventoryfigure should be extremely accurate, with as little slack as possible.(Points : 20)