OUR LADY OF THE PILLAR COLLEGE

San Manuel Campus

Cost Accounting and Control

I. High-Low Method/Least-square method

a. Data for the past 10 months were collected for Kristal, INC. to estimate the variable and
fixed manufacturing overhead.
The following data on supplies cost and direct labor hours from January to October are available

DIRECT LABOR HOURS (X) SUPPLIES COST (Y)

20 P50
40 110
60 150
20 70
30 80
40 100
50 150
10 60
30 110
50 120

b. Westinghouse Company manufactures major appliances. Beacause of growing interest in its

products, it has just had its most successful year. In preparing the budget for next year, its
controller complied these data.

VOLUME IN MACHINE
MONTH ELECTRICITY COST
HRS.
July 6,000.00 ₱ 60,000.00
August 5,000.00 ₱ 53,000.00
September 4,500.00 ₱ 49,500.00
October 4,000.00 ₱ 46,000.00
November 3,500.00 ₱ 42,500.00
December 3,000.00 ₱ 39,000.00
TOTAL 26,000.00 ₱ 290,000.00

 Using the high-low method compute:

1. Variable cot per machine hour
2. Monthly fixed electricity cost
3. Total electricity costs if 4,800 machine hours are projected to be used
next month.
 c. Johnson Corporation is preparing a flexible budget and desires to separate its electricity expense,
which is semi-variable and fluctuates with total machine hours, into its fixed and variable
components. Information for the first three months of 2019 is as follows:

VOLUME IN MACHINE ELECTRICITY

MONTH
HRS. COST
January 3,500.00 ₱ 31,500.00
February 2,000.00 ₱ 20,000.00
March 4,000.00 ₱ 35,600.00
TOTAL 9,500.00 ₱ 87,100.00
1. Compute the variable rate per machine hour
2. Compute the fixed portion of Johnson’s electricity expense
3. Compute the total manufacturing cost if Johnson’s actual machine hours used is 4,500

d. Valdez Motors Co. makes motorcycles. Management wants to estimate overhead costs to plan its
operations. A recent trade publication revealed that overhead costs tend to vary with machine
hours. To check this, they collected the following data for the past 12 months.

MONTH VOLUME IN MACHINE

ELECTRICITY COST
NO. HRS.
1 175 ₱ 4,500.00
2 170 ₱ 4,225.00
3 160 ₱ 4,321.00
4 190 ₱ 5,250.00
5 175 ₱ 4,800.00
6 200 ₱ 5,100.00
7 160 ₱ 4,450.00
8 150 ₱ 4,200.00
9 210 ₱ 5,475.00
10 180 ₱ 4,760.00
11 170 ₱ 4,325.00
12 145 ₱ 3,975.00
TOTAL 2,085 ₱ 55,381.00

1. Use the high-low method to estimate the fixed and variable portion of overhead costs based on
machine hours
2. If the plant is planning to operate at a level of 200 machine hours next period, what would be
the estimated overhead cost?
3. Use the method of least square to estimate the fixed and variable portion of overhead costs
based on machine hours.

II. Kyrie company produces different sizes of basketballs. The following cost were incurred
during the year:

Materials ₱ 65,000.00 15,000 is indirect

Labor ₱ 70,000.00 18,000 is indirect
Factory Overhead ₱ 95,000.00 including indirect materials and labors
General and Administrative
Expenses ₱ 2,600.00
Office Salaries ₱ 18,600.00
 1. Compute the prime costs
2. Compute the conversion costs
3. Compute the total product cost
4. Compute the total period cost
5. If the selling price is 50.00, how much is the net income?

III. The financial statements of Mother Goose Company included these items:

Marketing Cost ₱ 160,000.00

Direct Labor Cost ₱ 245,000.00
Administrative Costs ₱ 145,000.00
Direct Materials Used ₱ 285,000.00
Fixed factory overhead costs ₱ 175,000.00
Variable factory Overhead Costs ₱ 155,000.00
Compute for the following:
1. Prime cost
2. Conversion cost
3. Total inventoriable or product cost
4. Total period cost