Reference no: EM131694013

Question: X Company's accountant has collected the following cost and activity information from the past two months to help her develop a cost function that she could use to predict costs in July. Production in July is expected to be 9,600 units:

Month Overhead Cost Units Produced

May $25,200    7,400    

June $29,000    9,300    

a) Assume the accountant used account analysis and data from May to develop the cost function. She collected the following additional May information: cost of supplies was $9,200, all variable, cost of utilities was $6,000, 70% variable, and cost of rent was $10,000, all fixed. Using the resulting cost function, what would be the estimate of total overhead costs in July? 

b) Assume the accountant used the high-low method to develop the cost function with the original May and June information. Using the resulting cost function, what would be the estimate of fixed overhead costs in July? 

c) Using the high-low method cost function, what would be the estimate of variable overhead costs per unit in July?