1. Which of the following is a disadvantage fo the least squares method? a) It is relatively simple to use b) It produces more accurate estimates c) It considers all data points d) It may be costly to use 2 Product costs may be expensed in a later period a) TRUE b.) FALSE 3. Pick the option in increasing order of reliability a) Least squares, high low method and scattergraph b) least squares, scattergraph and high low method c) high low method. scattergraph and least squares d) high-low method, least squares and scattergraph 4.costs that increase as the volume activity increases within the relevant range: a) variable cost per unit b) average fored cost per unit c) total fixed cost d) total variable costs 5. Weaknesses of the high low method include all of the following except a.) the highest and lowest activity might not be representative of the population b) only two activities/observations are used to develop the estimates c.) this method cannot estimate the total costs if these are more than one variables d) this involves complex mathematical calculations 6. Faith, Inc. wants to develop a cost estimating technique for its utility consumption every month The following utility eapense were incurred in the following months Month Utility Cost Direct Labor Hours January 8.520 1809 February 7,628 1421 March 5,712 912 Apri 6,746 1102 May m 870 Using the high tow method method how much is the total cost during the month of May a) 5.231 b) 5,671 c) 5,581 d) 5,421 7. Jhojarah, Inc. has the following budgeted overhead formula for 2020. y. 1.006,969 25 per machine hours. The formula is expected to continue until the next five years prior to review of current business processes. If for the month of January 2021, the company incurred P333,914. Each unit requires 2 machine hours to complete. How many units were produced during the month of January? a) 13.461 b) 10,000 c) 5,000 d.) 26,922 8-10 Danielpadita Corp is in the process of preparingsbudget for 2021 for seconds The conformation for 2020 was follows Machine Hours Overhead 01 per un Contes 1st quarter 27.000 560.000 2nd quarter 41.000 780.000 Ord quarter 52.000 20.000 thquar 450.000 The expected to be produced is 2.000.000 in 2021 Buhing the high on the methodo much is the time co 2017 .) 2.457.000 D) 2.334.100 e) 2.359200 d) 3.196.800 9. Using the best quee method how much is the land cont component sich unter? a) 169407 b) 150,823 c) 2.461418 d) 2630,866 10. What is the construction in the last sumes method for each? Dy156.890. 14.100 y-12498012300 d) y 160.447. 12.300 11. During the month of March tot fed costs incurred was P1 500.000 units produced was 150.000 and was solat P30 Operating profits P15.000 10w much was the variable cost per unit during the more of March? a) 2844.000 b) 4.500.000 c) 1896 d) 1920 12 Revenue for the month of Aune is P27.000.000 Ench product is sold for 120 fotit feed cost for the months 12.000 DOO while total variable costs.000.000 How much is the feed cost pentas activity level? a) 3555 b) 5055 53.33 a) 29.00 13 Pipe, Inc is current production capacity of 200.000 machine hours Atis point that Cesis amounted to 560.000 of this amount 360.000 amounts o recationem nections 60.000 (alle) the remaining costs are maintenance costs AS.000 production Capacity communication expenses were 64.000 2 machine house needed to producent Using the high low method how much is verlatilo portion of the communication expense? a) 14.221 7,826 132.174 142.212 14 Using the same information above how much is the founded? 7826 427,826 420.000 d) 367.826 15 How much is the variable cost per unit? 066 ) 132 c) 096 1.92

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For computations:



High-Low method:

Variable cost per unit

= (Highest Cost-Lowest Cost)/(Highest Activity-Lowest Activity)



Variable cost per unit = 3.13

To compute for the fixed cost: we get the highest activity

Fixed cost = 8520-1809(3.13)



Total fixed cost = 2,857.83



=5580.93 OR 5581


Budgeted Overhead Formula for 2020:

Y=1006969+25(Machine Hours)

Monthly formula:

Y=(1006969/12)+25(Machine Hours)


For the month of January:

Let X be equal to Machine Hours:




X=10,000 Machine Hours

To get the number of units produced:

2 Machine Hours is needed to produced 1 unit. So, we get the total number of units produced by dividing the total Machine hours by 2.

Number of units produced= Total Machine Hours/2


= 5,000 units produced



High-Low method:

Variable cost per unit=(Highest Cost-Lowest Cost)/(Highest Activity-Lowest Activity)



Variable cost per unit = 10.40

To get the total fixed OH per quarter:

We use the highest activity:

Fixed Cost = Total cost – Variable cost

Fixed Cost = 820000 – 52000(10.40)

Fixed Cost = 279,200

Total Fixed Cost for the year= Fixed Cost per quarter * 4 quarters

= 279,200 * 4 quarters

= 1,116,800

To get the total variable cost for the whole year, we get:

Total variable cost = Total units produced * 0.10 Machine Hours * 10.40

Total Variable Cost = 2000000*0.10*10.40

Total Variable Cost= 2080000

To compute for the total costs:

Total cost= total fixed costs + Total variable Costs

= 1,116,800+2,080,000



To get the total contribution margin:

Total CM= Operating profit + Fixed Costs

= 156000+1500000

= 1656000

To get the CM per unit:

CM per unit= Total CM / Total units produced and sold

= 1656000/150000

= 11.04

To get the VC per unit:

VC per unit= Selling Price – CM per unit

= 30 – 11.04

= 18.96


To get the total units sold:

Units sold= Total revenues/ Selling price



To get the FC per unit at this activity level:

FC per unit= Total FC/225,000




High-Low Method:

To get the total variable cost= ((Highest Cost-Lowest cost)/(Highest activity-Lowest Activity))*200000




To get the FOH from mixed cost:

We use the highest cost:

FOH from Mixed=140,000-132174

= 7826

To get the total Fixed cost:

Total FC= FC from mixed + Depreciation




To get the Variable cost per unit:

From Mixed Cost: use high low method



From inspection cost:



Total Variable cost per unit.



Summary of answers:

1. D. May be costly to use.

2. B. False

3. A

4. D

5. D

6. C

7. C.

8. D.



11. C.

12. C.

13. C.

14. D.

15. D.