August 40,000 September 70,000 October 72,000 In addition, the cost of goods sold rate is 70 % and the desired inventory level is 30 % of next month ' s cost of sales. Prepare a purchases budget for July through September. 3. Question:( TCO 3) Patrick Ross, the president of Ross ' s Wild Game Company, has asked for information about the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed and how much is variable. The following data are the only records available: Month Machine-hours Overhead Costs February 1,700 $ 20,500 March 2,800 22,250 April 1,000 19,950 May 2,500 21,500 June 3,500 23,950 Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver. 4. Question:( TCO 5) Kirkland Company manufactures a part for use in its production of hats. When 10,000 items are produced, the costs per unit are: Direct materials $ 0.60 Direct manufacturing labor 3.00 Variable manufacturing overhead 1.20 Fixed manufacturing overhead 1.60 Total $ 6.40 Mike Company has offered to sell to Kirkland Company 10,000 units of the part for $ 6.00 per unit. The plant facilities could be used to manufacture another item at a savings of $ 9,000 if Kirkland accepts the offer. In addition, $ 1.00 per unit of fixed manufacturing overhead on the original item would be eliminated. a. What is the relevant per unit cost for the original part? b. Which alternative is best for Kirkland Company? By how much? =========================================