1. IENG 216
Overhead

2. Owner Equity = Assets - Liabilities
Accounting Equation
Owner Equity = Assets - Liabilities

7. Cost Behavior & Flexible Budgeting
Mixed costs are a function of fixed & variable costs
Cost-Volume formula
Y = a + bx
where Y = mixed cost to break up
x = a measure of activity (machine hrs)
a = fixed cost component
b = variable rate per unit x

8. High-Low Method
Suppose we have the following:

9. High-Low Method X Y High 280 2480 Low 190 2330 Difference 90 150
Variable rate = 150/90 = $1.67 per DLH

10. High-Low Method Fixed Cost Portion
Total Mixed - Variable = $2, (280)
= $2,012

11. High-Low Method Fixed Cost Portion
Total Mixed - Variable = $2, (280)
= $2,012
Total Mixed Cost = $2, X

12. Least Squares

13. Least Squares
Y = $1, x