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  • High Low Method Formula Excel Template

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    rpztx
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    The document describes how to use the high-low method to calculate expected factory overhead costs for an upcoming month. It provides the factory overhead costs for the previous 3 months along with production units. It then shows the computation to determine the variable cost per unit is $5 and fixed cost is $30,000. Given planned production of 7,000 units for the next month, the expected factory overhead cost is calculated to be $65,000.

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    The document describes how to use the high-low method to calculate expected factory overhead costs for an upcoming month. It provides the factory overhead costs for the previous 3 months along with production units. It then shows the computation to determine the variable cost per unit is $5 and fixed cost is $30,000. Given planned production of 7,000 units for the next month, the expected factory overhead cost is calculated to be $65,000.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    3 views3 pages

    High Low Method Formula Excel Template

    Uploaded by

    rpztx
    The document describes how to use the high-low method to calculate expected factory overhead costs for an upcoming month. It provides the factory overhead costs for the previous 3 months along with production units. It then shows the computation to determine the variable cost per unit is $5 and fixed cost is $30,000. Given planned production of 7,000 units for the next month, the expected factory overhead cost is calculated to be $65,000.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    High-Low Method Formula Excel Template

    Prepared by Dheeraj Vaidya, CFA, FRM


    dheeraj@wallstreetmojo.com

    visit - www.wallstreetmojo.com
    Let us take the example of a company that wants to determine the expected amount of factory overhead cost that it
    will incur in the upcoming month. The factory overhead cost in the previous three months is as follows. The company
    is planning to produce 7,000 units in March 2019 on the back of buoyant market demand. Help the company
    accountant to calculate the expected factory overhead cost in March 2019 by using the high-low method.

    Month Units Total cost


    Dec-18 6,000 $60,000
    Jan-19 5,000 $40,000
    Feb-19 4,000 $50,000

    Computation
    Highest activity units 6,000
    Lowest activity units 4,000
    Highest activity cost $60,000
    Lowest activity cost $50,000
    Number of units for March 2019 7,000
    Variable cost per unit $5
    Fixed cost $30,000

    Expected Overhead Cost $65,000


    overhead cost that it
    follows. The company
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