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Question

The following selected data were taken from the accounting records of Metal Manufacturing. The company uses

direct-labor hours as its cost driver for overhead costs.


Month                  Direct-Labor Hours                  Manufacturing Overhead


January               26,000                                   $690,000

February             28,000                                   $729,000

March                  37,000                                   $888,000

April                     29,000                                   $751,500

May                     33,000                                   $789,000

June                    31,000                                   $786,000


March's costs consisted of machine supplies ($170,200), depreciation ($27,000), and plant maintenance ($690,800). These costs exhibit the following respective behavior: variable, fixed, and semivariable.

 

The manufacturing overhead figures presented in the preceding table do not include Metcalf's supervisory labor cost, which is step-fixed in nature. For volume levels of less than 15,000 hours, supervisory labor amounts to $72,000. The cost is $144,000 from 15,000-29,999 hours and $216,000 when activity reaches 30,000 hours or more.

 

1. What is the machine supplies cost and depreciation for January.

2. Using the high-low method, analyze Metal's plant maintenance cost and calculate the monthly fixed portion and the variable cost per direct-labor hour.

3. Assume that present cost behavior patterns continue into the latter half of the year. What is the total amount of manufacturing overhead the company can expect in November if 28,800 direct-labor hours are worked.

Top Answer

1.Supplies cost of January = $119,600... View the full answer

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