Sarnia Ltd. is a manufacturing company that produces a single product. The company keeps meticulous...
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Sarnia Ltd is a manufacturing company that produces a single product. The company keeps meticulous records of manufacturing activities from which the following information has been extracted: MarchLow JuneHigh Number of units produced Cost of goods manufactured $ $ Work in process inventory, beginning $ $ Work in process inventory, ending $ $ Direct materials cost per unit $ Direct labour cost per unit $ Manufacturing overhead cost, total The companys manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning, management wants to determine how much of the overhead cost varies with the number of units produced versus how much is fixed per month. Required: For both March and June, estimate the amount of manufacturing overhead cost added to production. Using the highlow method, estimate a cost formula for manufacturing overhead. If units are produced during a month, what would be the cost of goods manufactured? Assume that work in process inventories do not change.
Sarnia Ltd is a manufacturing company that produces a single product. The company keeps meticulous records of manufacturing activities from which the following information has been extracted:
MarchLow JuneHigh
Number of units produced
Cost of goods manufactured $ $
Work in process inventory, beginning $ $
Work in process inventory, ending $ $
Direct materials cost per unit $
Direct labour cost per unit $
Manufacturing overhead cost, total
The companys manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning, management wants to determine how much of the overhead cost varies with the number of units produced versus how much is fixed per month.
Required:
For both March and June, estimate the amount of manufacturing overhead cost added to production.
Using the highlow method, estimate a cost formula for manufacturing overhead.
If units are produced during a month, what would be the cost of goods manufactured? Assume that work in process inventories do not change.
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