Cost Estimating High/Low budgeted cost

1 Variances:

HDD makes chairs. They figure it takes about 15 minutes to make each chair. During May they made 200,000 chairs. Labor costs were $1,512,000, which was paid to workers for 54,000 hours used on the chairs. The budgeted labon rate is $30 per hour.

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What was the budgeted cost for the 200,000 chairs?

b) Calculate the [two] labor cost variances. Label all variances explicitly


2 Cost Estimating- High/Low:

Wiki, has recorded the following costs over the past several months based on the number of tickets sold:

Use the High-Low” method to answer the following:

a) What are the Variable Costs per ticket sold

b) What are the Fixed Costs, in total?

c) If 5,000 tickets were sold what you would estimate the costs to be.


3. Overhead:

Over& Underapplied: Monte Doggie Inc. is in the profitable Dog Clothing business. They apply overhead based on the labor hours for the humans working there. They estimated total overhead cost would be $800,000. Budgeted labor costs were $2,000,000 with 40,000 labor hours budgeted. Actual overhead costs incurred were $836,000 and actual labor hours were 38,000.

a) What is the predetermined overhead rate? (Label it correctly)

b) By how much is it over or under applied (in total, NOT per hour & show calculation)

c) Is overhead over or under applied?


4 Break-Evenies.

Tipsy Topper has decided to sell autographed doggie FOOD bowls so he can have a little spare cash for a trip to Paris to check out the Frenchie Poodles he’s heard about. It is going to cost him $50,000 to buy bowl molding equipment, plus he has to pay a one-time licensing” fee of $10,000 to Mr, Big Dog for protection. Each bowl will cost $4 for-the clay, $2 for the finish, $1 for shipping, and labor costs, which are: $20 per hour (they can make 5 bowls per hour). Topper thinks figures he’ll sell the bowls for $21 each.


A) How many bowls does Tipsy Topper have to sell to breakeven?

B) How many to make $15,000 for that trip to French Poodle Land?

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