Windsor Company Incurred the Following Costs and Machine Hours During

question 154

Essay

Windsor Company incurred the following costs and machine hours during the first three months of the current year.Assume that the driver for all costs is machine hours. $\begin{array}{lrrr}\text { Type of cost } & \text { January } & \text { February } & \text { March } \\\text { Electricity } & \$ 20,000 & \$ 15,000 & \$ 18,000 \\\text { Depreciation } & 15,000 & 15,000 & 15,000 \\\text { Factory supplies } & 9,600 & 5,600 & 7,600 \\\text { Property taxes } & 12,000 & 12,000 & 12,000\\\\\text { Machine hours }&1,200&700&950\end{array}$ Required:
A. Using the high-low method, construct a cost formula for electricity cost.
B. If Windsor had total costs in April of $53,000, how many machine hours did they incur during April?
C. If Windsor expects to incur 1,500 machine hours in May, what would be the estimate of their total costs?

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Definitions:

Cash Receipts

The collection of money, typically in the form of cash or checks, received by a business during its operating activities.

Cash Payments

Transactions involving the outflow of cash to settle obligations or purchase goods and services.

Control Environment

The overall attitude of management and employees about the importance of controls.

Internal Control Structure

A set of processes and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.