Question

The following selected data were taken from the accounting records of Colorado Enterprises:

Month	Machine Hours				Manufacturing Overhead
May		48,500			$	914,000
June		61,000				1,140,000
July		73,000				1,327,500
August		54,500				985,000

Manufacturing overhead consists of three different costs; (1) machine supplies (variable), (2) property taxes (fixed), and (3) plant maintenance (semivariable). July's overhead costs were $173,000 for machine supplies, $24,500 for property taxes, and $1,130,000 for plant maintenance.

Required:
A. Determine the machine supplies and property taxes for May.
B. By using the high-low method, analyze Colorado’s plant maintenance cost and calculate the monthly fixed portion and the variable cost per machine hour.
C. Assume that present cost behavior patterns continue into future months. Estimate the total amount of manufacturing overhead the company can expect in September if 57,000 machine hours are worked.

For all requirements, round intermediate rate calculations to 2 decimal places and all other intermediate calculations to the nearest whole dollar. Round your final answers for "Variable plant maintenance" to 2 decimal places and all other calculations to the nearest whole dollar.

Answer 1