Problem 1: Utility costs at one of Hambley Corporation's factories are listed below:
Machine-Hours Utility Cost
February 4,221 $39,308
March 4,268 $39,573
April 4,234 $39,392
May 4,237 $39,394
June 4,299 $39,787
July 4,318 $39,881
August 4,305 $39,798
September 4,308 $39,831
October 4,226 $39,315
Management believes that utility cost is a mixed cost that depends on machine-hours.
Required:
Estimate the variable cost per machine-hour and the fixed cost per month using the high-low method.
Problem 2. Whitford Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products.
Activity Cost Pools Activity Rate
Setting up batches $30.11 Per batch
Assembling products $3.04 Per assembly hour
Processing customer orders $81.86 Per customer order
Product W52Q Product Q29D
Number of batches 74 26
Number of assembly hours 239 208
Number of customer orders 72 5
Required:
a. How much overhead cost would be assigned to Product W52Q using the company's activity-based costing system?
b. How much overhead cost would be assigned to Product Q29D using the company's activity-based costing system?