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Task P 2

The document analyzes the costs of Redeemer Corporation's machine operations from January to September. It calculates the variable cost per machine hour to be P2.452 based on the costs in March and August. It then determines the monthly fixed cost is P4,027 based on the total and variable costs in March and August matching the total costs. Finally, it estimates that if machine hours were 2,900, the total cost would be P11,137.

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arisu
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448 views

Task P 2

The document analyzes the costs of Redeemer Corporation's machine operations from January to September. It calculates the variable cost per machine hour to be P2.452 based on the costs in March and August. It then determines the monthly fixed cost is P4,027 based on the total and variable costs in March and August matching the total costs. Finally, it estimates that if machine hours were 2,900, the total cost would be P11,137.

Uploaded by

arisu
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Redeemer Corporation has been reviewing its total costs over the last few months and has

established
the following (relevant range is from 2,000 to 5,000):

Month Machine hours Electricity costs

January 2,100 P9,750

February 3,400 14,300

March 6,800 20,700

April 4,900 19,550

May 2,500 11,150

June 3,000 12,900

July 2,400 10,800

August 1,800 8,440

September 4,800 22,000

Variable cost per unit

Variable cost per unit = (P20,700-P8,440)/(6,800-1,800)

= P12,260/5,000

= P 2.452

Total fixed cost

High Low

Total Cost P20,700 P8,440

Less: Total Variable Cost

P2.452 x 6,800 hours 16,673

P2.452 x 1,800 hours 4,413

Monthly fixed cost P4,027 P4,027

Y = a + bx

P20,700 = P4,027 + P2.452(6,800)

= P20,700 = P20,700

Or
P8,440 = P4,027 + P2.452(1,800)

= P8,440 = P8,440

Total cost assuming Kings, Inc. plans to incur 2,900 machine hours.

Y = P4,027 + P2.452(2,900)

= P11,137

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