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Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993 Exercise 11
Methods of Estimating Costs: Account Analysis
A consulting firm's accounting records show the following costs for year 1:
Production was 100,000 billable hours. Fixed overhead was $200,000.
For year 2, direct materials costs are expected to increase by 10 percent per unit. Direct labor costs are expected to increase by 15 percent. Variable overhead per billable hour is expected to remain the same, but fixed overhead is expected to increase by 5 percent.
Required
a. Year 2 production is expected to be 130,000 billable hours. What are the estimated direct materials, direct labor, variable overhead, and fixed overhead costs for year 2
b. Determine the total costs per billable hour for year 1 and year 2.
A consulting firm's accounting records show the following costs for year 1:
Production was 100,000 billable hours. Fixed overhead was $200,000.
For year 2, direct materials costs are expected to increase by 10 percent per unit. Direct labor costs are expected to increase by 15 percent. Variable overhead per billable hour is expected to remain the same, but fixed overhead is expected to increase by 5 percent.
Required
a. Year 2 production is expected to be 130,000 billable hours. What are the estimated direct materials, direct labor, variable overhead, and fixed overhead costs for year 2
b. Determine the total costs per billable hour for year 1 and year 2.
Explanation
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Verified
Cost estimate is the approximation of th...
Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
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