(Appendix 5A) The management of Casablanca Manufacturing Corporation believes that machine-hours is an appropriate measure of activity for overhead cost. Shown below are machine-hours and total overhead costs for the past six months:
Assume that the relevant range includes all of the activity levels mentioned in this problem.
-If Casablanca expects to incur 185,000 machine hours next month,what will the estimated total overhead cost be using the high-low method?
Definitions:
FIFO
An inventory valuation method that assumes the first items placed in inventory are the first sold (First In, First Out).
Cost of Goods Sold
Specific costs directly linked to the creation of products sold by a business.
Inventory Cost Formula
Methods such as First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and weighted average cost used to calculate the cost of goods sold and ending inventory valuation.
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