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Sarnia Ltd. is a manufacturing company that produces a single product. The company keeps meticulous...

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Accounting

Sarnia Ltd. is a manufacturing company that produces a single product. The company keeps meticulous records of manufacturing activities from which the following information has been extracted:
MarchLow JuneHigh
Number of units produced 6,0409,060
Cost of goods manufactured $ 174,720 $ 271,000
Work in process inventory, beginning $ 12,600 $ 44,800
Work in process inventory, ending $ 21,000 $ 29,400
Direct materials cost per unit $ 66
Direct labour cost per unit $ 1010
Manufacturing overhead cost, total ??
The companys manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning, management wants to determine how much of the overhead cost varies with the number of units produced versus how much is fixed per month.
Required:
For both March and June, estimate the amount of manufacturing overhead cost added to production.
Using the high-low method, estimate a cost formula for manufacturing overhead.
If 7,040 units are produced during a month, what would be the cost of goods manufactured? Assume that work in process inventories do not change.

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