George Henry Corporation Has a Machining Capacity of 300,000 Hours

question 58

Essay

George Henry Corporation has a machining capacity of 300,000 hours per year. Utilization of capacity is normally 60%; it has been as low as 25% and as high as 75%. An analysis of the accounting records revealed the following selected costs: $\begin{array}{l}\begin{array}{lll}\\\\\text { Cost A:}\\\text { Total}\\\text { Per hour}\\\text { Cost B:}\\\text { Total}\\\text { Per hour}\\\text { Cost C:}\\\text { Total}\\\text { Per hour}\\\end{array}\begin{array}{c}\text { At a } 25 \% \\\underline {\text { Utilization Rate }}\\\\\$ 500,000 \\\$ 6.67 \\\\? \\\$ 11.80 \\\\\$ 780,000 \\\$ 10.40\end{array}\begin{array}{lll}\text { At a } 75 \% \\\underline {\text { Utilization Rate }}\\\\\$ 500,000 \\?\\\\\$ 2,655,000 \\\$ 11.80 \\\\\$ 2,330,000 \\\$ 10.36\end{array}\end{array}$
George Henry uses the high-low method to analyze cost behaviour.
Required:
A. Classify each of the costs as being either variable, fixed, or semi-variable.
B. Calculate amounts for the two unknowns in the preceding table.
C. Calculate the total amount that George Henry would expect at a 60% utilization rate for Cost A, Cost B, and Cost C.
D. Develop an equation that George Henry can use to predict total cost for any level of hours within its range of operation.

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Definitions:

Carbon-Carbon

Refers to bonds or interactions between carbon atoms within organic compounds; fundamental in organic chemistry and materials science.

σ Bonds

The strongest type of covalent chemical bond formed from the head-on overlapping of atomic orbitals, which allows for the free rotation of the bonded atoms around the bond axis.

σ Molecular Orbital

A type of molecular orbital formed by the head-on overlapping of atomic orbitals, characterized by electron density along the axis connecting the nuclei of the atoms involved.

Nodes

Points along a standing wave where the wave has minimal amplitude. In quantum mechanics, it refers to points where the probability density of a particle is zero.