15. T,F. When a product cost is composed of both fixed and variable costs, the t

Question

15. T,F. When a product cost is composed of both fixed and variable costs, the total unvit cost wi decrease when t goes down. PART II. PROBLEMS (60 POINTS) 1. The following data are collected from ABC Company's production data for the period ended December 31, 2014. Month Machine hours Factory -Overhead Costs 68 $1,190 Jan. Feb. Mar. April May June 60 770 96 82 46 1,456 1.316 710 Required: Using the high-low method, compute: a. The variable cost and the Fixed cost b. Fit your answer into: Y abx c. If a total of 110 machine hours were to be used in August, what would be the total cost?S computation

Explanation / Answer

a) Variable cost and fixed cost :

Variabe cost per machine hour = change in cost/change in activity

                               = (1456-710)/(96-46)

Variable cost per machine hour = 14.92 per machine hour

Fixed cost = Total cost-variable cost

                = 710-(46*14.92)

Fixed cost = 23.68

b) Y = a+bx

   Y = 23.68+14.92X

C) Total cost on 110 machine hour :

Total cost = (110*14.92+23.68) = 1664.88

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