Adriana Corporation manufactures football equipment. In planning for next year, the managers want to understand the relation between activity and overhead costs. Discussions with the plant supervisor suggest that overhead seems to vary with labor-hours, machine-hours, or both. The following data were collected from last year€™s operations:

Required
a. Use the high-low method to estimate the fixed and variable portions of overhead costs based on machine-hours.
b. Managers expect the plant to operate at a monthly average of 7,500 machine-hours next year. What are the estimated monthly overhead costs, assuming noinflation?

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Month Labor-Hours 3,625 3,575 3,400 3,700 3,900 3,775 3,700 3,625 3,550 3,975 3,375 3,550 6,775 7,035 7,600 7,265 7,955 7,895 6,950 6,530 7,270 7,725 6,490 8,020 $513,435 518,960 549,575 541,400 581,145 572,320 636,110 510,470 532,195 565,335 503,775 564,210 10 12