Zookal Homework Help

Homework Help

  1. Business
  2. Accounting
  3. charlene is the owner of charlenes computer care 3c and...

Question: charlene is the owner of charlenes computer care 3c and...

Question details

Charlene is the owner of Charlenes Computer Care (3C) and has been in the business of servicing computers and computer systems at affordable prices for just over five years, 3Cs primary clients are local businesses but include some residential customers Their advertised approach is to analyze the problem, develop a range of IT options, explain their specific recommendation to the customer, and finally estimate the time and costs associated with the service prior to commencing work Their approach has proven successful, but competition is getting much stiffer, and Charlene is concerned that her approach to determining costs and prices for any particular job is not correctly incorporoting all of the companys costs. She has heard obout the concept of cost allocation and asks her accountant to create an allocation system for the business Her accountant decides to implement a single-driver allocation system and needs to develop a reliable cost function to estimate total indirect costs, She will use this estimate for the numerator of the single driver overhead rate, and she will use service hours as the cost driver and denominator in the overhead rate. To estimate the parameters of this cost function, the accountant first studied the behavior of last months costs, when the company spent 311 service hours repairing 36 computer systems. Here are the results of her analysis: Item Fixed Cost $263 $3,843 $3,245 S0 $345 $7,695 Variable Cost 595 Utilities Office ren Administration Supplies $236 3,112 $305 $3,748 otal Concerned that last month may not havc been typical month อnd her bra down of fixed and variable costs not completely correct, he accountant decided to use the h gh-low method to create another cost unction. She gathered individual cost and service hour data from the last six months; the following were for the two months when costs and service hours were the lowest and the highest: Office rent Administration Supplies Trainin otal Service hours Customers low month $230 $2,990 $3,110 $1,529 $595 9,454 245 high month $320 $2,990 $3,522 $3,508 $738 $11,078 564 Next month, Chariene expects the company to spend 440 hours solving clients computer system problems REQUIRED [ROUND ALL PER-UNIT COSTS TO TWO DECIMAL PLACES AND TOTAL COSTS TO THE NEAREST DOLLAR. Part A (6 tries; 5 points) What is the accountants estimate of total overhead next month if she uscs the cost function based on her analysis of last months cost data? Submit Answer Tries 0/6 Part B (6 tries; S points) What is the accountants estimate of total overhead next monthげshe uses the cost function based on the high-low method? Submit Answer Tries 0/6

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution