Cost Segregation

Technique
AGENA MARIE SAN PABLO
 HIGH-LOW POINT
T he f ixed and variableMETHOD
por tions of the mixed costs are
computed from 2 sampled data points -- the highest
and lowest points based on activity or cost driver.
T he chief f inance of ficer of ABC Corporation is analyzing the relationship of its
electricity costs and the number of batches produce. T he following data are
assembled for this purpose:
MonthNo. of Batches Electricity Costs
Janua 4 P22,000
Februa 7 30,000
March5 25,000
April 2 15,000
May 3 21,500
June 6 29,000
July 8 36,000
Using the
1.2. Variablehigh-low
cost per point
unit method,3. determine
Monthly the
cost following:
function
Annual xed cost 4.10Estimated cost assuming
batches next month. they will produce
 LEAST-SQUARES METHOD
A statistical technique that investigates the
association between dependent and independent
variable.
T he chief f inance of ficer of ABC Corporation is analyzing the relationship of its
electricity costs and the number of batches produce. T he following data are
assembled for this purpose:
MonthNo. of Batches Electricity Costs
Janua 4 P22,000
Februa 7 30,000
March5 25,000
April 2 15,000
May 3 21,500
June 6 29,000
July 8 36,000
Determine the total
least-squares method. f i
x ed cost and variable cost rate of electricity using the
 SCATTER GRAPH METHOD
All obser ve d costs at dif fe rent activity levels are
plotted on a graph.
is method is based on sound judgment.
A regression line is then f itted to the plotted points to
represent the line function.
Assignment
XYZ Company s manufacturing overhead costs at various level of activity are
presentend below: ’

Month
March Machine
500 hours P 970 Total Overhead Costs
April
May 600 400
1,089 851
June 700 1,208
Tis ashe break down
follows: of the overhead costs in April at 400 machine-hour level of activity
Supplies
Salaries (Variable)
(Fixed) P260 300
Utilities
Total P851 (Mixed) 291
Required:
1.2. How much of June ’s overhead cost of 1,208 consisted utilities cost?
Using, least-squares method, determine the cost function for total overhead
costs?
3. What would be the total overhead costs if operating level is at 200 machine hours?
Assignment
XYZ Company s manufacturing overhead costs at various level of activity are
presentend below: ’

Month
March Machine
500 hours P 970 Total Overhead Costs
April
May 600 400
1,089 851
June 700 1,208
Tis ashe break down
follows: of the overhead costs in April at 400 machine-hour level of activity
Supplies
Salaries (Variable)
(Fixed) P260 300
Utilities
Total P851 (Mixed) 291
Required:
1.2. How much of June ’s overhead cost of 1,208 consisted utilities cost?
Using, least-squares method, determine the cost function for total overhead
costs?
3. What would be the total overhead costs if operating level is at 200 machine hours?
Assignment
XYZ Company s manufacturing overhead costs at various level of activity are
presentend below: ’

Month
March Machine
500 hours P 970 Total Overhead Costs
April
May 600 400
1,089 851
June 700 1,208
Tis ashe break down
follows: of the overhead costs in April at 400 machine-hour level of activity
Supplies
Salaries (Variable)
(Fixed) P260 300
Utilities
Total P851 (Mixed) 291
Required:
1.2. How much of June ’s overhead cost of 1,208 consisted utilities cost?
Using, least-squares method, determine the cost function for total overhead
costs?
3. What would be the total overhead costs if operating level is at 200 machine hours?
Assignment
XYZ Company s manufacturing overhead costs at various level of activity are
presentend below: ’

Month
March Machine
500 hours P 970 Total Overhead Costs
April
May 600 400
1,089 851
June 700 1,208
Tis ashe break down
follows: of the overhead costs in April at 400 machine-hour level of activity
Supplies
Salaries (Variable)
(Fixed) P260 300
Utilities
Total P851 (Mixed) 291
Required:
1.2. How much of June ’s overhead cost of 1,208 consisted utilities cost?
Using, least-squares method, determine the cost function for total overhead
costs?
3. What would be the total overhead costs if operating level is at 200 machine hours?