Wimmer's Storage Ran Its Freezer in February, a Slow Month

question 142

Essay

Wimmer's Storage ran its freezer in February, a slow month, for 360 hours for a total cost of $57,600.In July, a peak month, the freezer ran for 720 hours for a total cost of $82,080.Required:
a.Using the high-low method, determine the overhead cost equation for the department if hours of freezer use are used as the cost driver?
b.What is the estimated total cost at an operating level of 500 hours?

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Definitions:

Fiduciary Duty

An obligation to act in the best interest of another party, such as the relationship between a trustee and the beneficiaries of a trust.

Public

The general population or community at large, often in relation to matters of public interest or public spaces.

Personal Guarantee

A commitment by an individual to assume responsibility for the financial obligations of another party, typically in the context of a loan or lease.

Separate Legal Entity

A legal entity, such as a corporation, that is legally distinct from its owners, allowing it to own property, incur debts, and be sued independently.