## Description

Month

January

February

March

April

May

June

July

August

September

October

November

December

a.

Machine Hours

Electricity Costs

2,000

$

12,000

2,320

10,500

1,560

6,650

2,480

11,500

3,040

14,125

2,640

11,000

3,280

12,375

2,800

11,375

1,600

6,700

2,960

13,000

3,760

15,450

3,700

15,400

A. Using the high-low method, develop

an estimate of variable electricity costs

per machine hour.

Required: Transfer the information in the table above to an Excel spreadsheet and prepare the solutions to the

B. U the the high-low method, develop

following questions. Your solution should showsing appropriate formulas and the detailed calculations. In using

aand functions to show your understanding of basic Excel functions.

Excel, you should use appropriate formulas n estimate of fixed electricity costs per

month.

Clearly identify your answer to each question.

Month

January

February

March

April

May

June

July

August

September

October

November

December

a.

Machine Hours

Electricity Costs

2,000

$

1 develop

C. Using the high-low method,2,000

2,320

a cost function 10,500

for monthly electricity

1,560

6,650

costs.

2,480

11,500

3,040

14,125

2,640

11,000

3,280

12,375

2,800

11,375

1,600

6,700

D. Estimate electricity costs for a month

2,960

13,000 hours are

in which 3,000 machine

3,760

15,450

worked.

3,700

15,400

A. Using the high-low method, develop

an estimate of variable electricity costs

per machine hour.

B. Using the high-low method, develop

an estimate of fixed electricity costs per

month.

C. Using the high-low method, develop

a cost function for monthly electricity

costs.

**Part 2.**

Page 3

Job order costing

Reed Incorporated uses a job-order costing system and a predetermined overhead rate based on machine

hours.

At the beginning of the year, the company estimated manufacturing overhead for the year would be $240,000

and machine hours would be 8,000.

The following information pertains to December of the current year:

Actual manufacturing overhead cost incurred in December was $61,000.

Jobs 10 and 12 were completed during December. Job 10 was sold to customer (see c below).

Required: Transfer the information in the table above to an Excel spreadsheet and prepare the solutions to the

following questions. Your solution should show the appropriate formulas and the detailed calculations. In using

Excel, you should use appropriate formulas and functions to show your understanding of basic Excel functions.

Clearly identify your answer to each question.

a. Compute the predetermined overhead application rate.

b. Determine the total cost associated with each job.

c. Jobs 10 and 12 were completed during the month. If job 10 was delivered to customers that paid $50,000

cash, what is the gross profit for job 10?

d. What is the cost assigned to ending work in process?

e. What is the cost assigned to ending finished goods?

f. How much was overhead over/under applied?

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