EXERCISE 5-12 (30 MINUTES)

2. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE 2. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
2. High-low analysis of maintenance cost:

Direct La-

bor-Hours Maintenance

Cost

High level of activity ... 75,000 ¥4,125,000 Low level of activity... 50,000 3,250,000 Change ... 25,000 ¥ 875,000 Variable cost element: Change in cost ¥875,000= =¥35 per DLHChange in activity 25,000 DLH Fixed cost element: Total cost at the high level of activity ... ¥4,125,000 Less variable cost element (75,000 DLH × ¥35 per DLH) ... 2,625,000 Fixed cost element ... ¥1,500,000 Therefore, the cost formula for maintenance is ¥1,500,000 per year plus ¥35 per direct labor-hour or Y = ¥1,500,000 + ¥35X

© The McGraw-Hill Companies, Inc., 2006. All rights reserved.

Solutions Manual, Chapter 5

245

Problem 5-23 (continued)