Reference no: EM133535482
Question: The following selected data were taken from the accounting records of Metcalf Manufacturing. The company uses direct-labor hours as its cost driver for overhead costs.
| Month | Direct-Labor Hours | Manufacturing Overhead |
| January |
32,000 |
$ 696,000 |
| February |
34,000 |
735,000 |
| March |
44,000 |
894,000 |
| April |
35,000 |
753,000 |
| May |
39,000 |
798,000 |
| June |
37,000 |
795,000 |
March's costs consisted of machine supplies ($228,800), depreciation ($30,000), and plant maintenance ($635,200). 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 $75,000. The cost is $150,000 from 15,000 to 29,999 hours and $225,000 when activity reaches 30,000 hours or more.
Required:
1 Determine the machine supplies cost and depreciation for January.
2 Using the high-low method, analyze Metcalf'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. Estimate the total amount of manufacturing overhead the company can expect in November if 29,400 direct-labor hours are worked.