ACCOUNTING FOR MANAGER

ACCT8144

INDIVIDUAL ASSIGNMENT

NEZALIAN NUR RICKY IRAWAN

2001847212
LOB 6

BINUS BUSINESS SCHOOL

MM BLENDED LEARNING (JWC)
2018
QUESTION 1.
Galaxy Company whose total factory overhead coats fluctuate somewhat from year to year
according to the number of machine hours worked in its production facility. These costs at high
and low levels of activity over recent years are given below:
Level of activity
Low High
Machine hours 60,000 80,000
Total Factory Overhead Costs $274,000 $312,000

The factory Overhead costs above consist of indirect materials, rent, and maintenance. The
company has analyzed these costs at the 60,000 machine-hours level of activity as follow:

Indirect Materials (Variables) $90,000

Rent (fixed) 130,000
Maintenance (mixed) 54,000
Total Factory Overhead Costs $274,000

For planning purposes, the company wants to break down the maintenance costs into its
Variable and Fixed cost elements.
Required:
1. Estimate how much of the factory overhead cost of $312,000 at the high level of activity
consists of maintenance costs. (Hints: to do this, it might be helpful to first determine how
much of the $312,000 cost consist of indirect material and rents. Think about the behavior of
variable and fixed costs)
2. Using the high low method, estimate a cost formula for maintenance.
3. What total overhead cost would you expect the company to incur at an operating level of 75,000
machine hours?
 𝐼𝑛𝑑𝑖𝑟𝑒𝑐𝑡 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙
1. Indirect material cost per machine hour =
𝑀𝑎𝑐ℎ𝑖𝑛𝑒 ℎ𝑜𝑢𝑟𝑠 𝑙𝑒𝑣𝑒𝑙
$ 90,000
=
60,000
= $ 1.5

Indirect material 80,000 machine hours level = 80,000 x $ 1,5

= $ 120,000
Fixed Cost = $ 130,000

Maintenance cost = Total Factory Overhead – Indirect material cost – Fixed Cost
= $ 312,000 – $ 120,000 – $ 130,000
= $ 62,000

Jadi maintenance cost pada 80,000 machine hours level adalah sebesar $ 62,000.

2. Cost formula for maintenance using high – low method

( $ 62,000−$ 54,000)
Variabel maintenance cost per hour = ( 80,000− 60,000)
$ 8,000
= 20,000
= $ 0.4 per hour

Fixed Cost = $ 62,000 – ($ 0.4 x 80,000)

= $ 30,000

Asume X = Machine hours

Asume Y = Maintenance Cost

Formula Y = $ 30,000 + 0.4 X

3. Total overhead cost for operating level of 75,000 machine hours

Indirect material for 75,000 machine hours = 75,000 x $ 1.5
= $ 112,500
Rent (Fixed Cost) = $ $ 130,000

Maintenance Cost = $ 30,000 + (0.4 x 75,000)

= $ 60,000

Total Overhead Cost = $ 112,500 + 130,000 + 60,000

= $ 302,500
QUESTION 2
Youth Corporation has an activity-based costing system with three activity cost pools-Processing,
Setting Up, and Other. The company's overhead costs consist of equipment depreciation and
indirect labor and are allocated to the cost pools in proportion to the activity cost pools'
consumption of resources. Equipment depreciation totals $72,000 and indirect labor totals
$8,000. Data concerning the distribution of resource consumption across activity cost pools
appear below:

Required:

Assign overhead costs to activity cost pools using activity-based costing.

Jawaban :