At the beginning of last year, Jade Kamm, controller for Jager Inc., prepared the following budget for conversion costs at two levels of activity for the coming year:

During the year, the company worked a total of 112,000 direct labour hours and incurred the following actual costs:
Direct labour ....................................$963,200
Supervision ......................................190,000
Utilities .......................................... 20,000
Depreciation .....................................225,000
Supplies .......................................... 24,640
Maintenance .....................................237,000
Rent .............................................. 120,000
Other .............................................. 60,500
Jager applied overhead on the basis of direct labour hours. Normal volume of 120,000 direct labour hours is the activity level to be used to compute the predetermined overhead rate.
Required:
1. Determine the cost formula for each of Jager's conversion costs. (Hint: Use the high-low method.)
2. Prepare a performance report for Jager's conversion costs for last year. Should any cost item be given special attention? Explain

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Direct Labour Hours 100,000 120,000 Direct labour $1,000,000 180,000 18,000 225,000 25,000 $1,200,000 180,000 21,000 225,000 Supervision Utilities Depreciation Supplies 30,000 Maintenance 240,000 120,000 284,000 Rent Other 120,000 60,000 $1,868,000 70,000 $2,130,000 Total manufacturing cost