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 ?