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Chapter 2-Cost Concepts

The document presents calculations for variable and fixed costs for three companies: Westinghouse Company, Johnson Corporation, and Valdez Motors Co. It details the computation of variable costs per machine hour, total electricity expenses, and total manufacturing costs based on different levels of machine hours. Each company's fixed costs remain consistent across varying production levels, while variable costs fluctuate with machine usage.

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Ayra Bernabe
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83 views2 pages

Chapter 2-Cost Concepts

The document presents calculations for variable and fixed costs for three companies: Westinghouse Company, Johnson Corporation, and Valdez Motors Co. It details the computation of variable costs per machine hour, total electricity expenses, and total manufacturing costs based on different levels of machine hours. Each company's fixed costs remain consistent across varying production levels, while variable costs fluctuate with machine usage.

Uploaded by

Ayra Bernabe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Problem 8– Westinghouse Company

1. Variable cost/machine hour = 60,000 – 39,000


6,000 - 3,000

= 21,000
3,000

= 7.00/machine hr.
High Low
2. Total monthly cost P60,000 P 39,000
Less – Variable
6,000 x 7 42,000
3,000 x 7 21,000
Fixed cost P 18,000 P 18,000

3. Total electricity cost = Fixed cost + Variable (capacity)


= 18,000 + 7(4,800)
= 51,600

Problem 9 – Johnson Corporation

1. Variable cost per machine hour = 35,600 – 20,000


4,000 - 2,000
= 7.80 per machine hour

2. 4,000 hours 2000 hours


Total electricity expense 35,600 20,000
Less: Variable costs
( 4,000 x 7.80) 31,200
( 2000 x 7.80) ______ 15,600
Fixed cost 4,400 4,400

3. Fixed cost 4,400


Variable cost ( 4,500 x 7.50) 35,100
Totl manufacturing costs 39,500

Problem 10 – Valdez Motors Co.


1. Variable cost per machine hour = 5,475 – 3,975
210 - 145
= 23.08 per machine hour
210 hours 145 hours
Total overhead costs 5,475 3,975
Less: Variable costs
( 210 x 23.08) 4,847
( 145 x 23.08) _____ 3,347
Fixed cost 628 628

2. Fixed cost 628


Variable cost (23.08 x 200) 4,616
Total overhead cost 5,244

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