The Swenson Company is developing a budgeting program for its manufacturing operations. In analyzing indirect labor costs, figures for each month in the past year, 19X1, have been assembled.

1. What does this pattern of cost behavior suggest about the control of indirect labor costs in the factory?
2. Using the high-low points method, compute the fixed element and the variable element of indirect labor costs.
3. Is the high-low points method satisfactory for budgeting indirect labor in this example? Explain.
Chapter

Direct Indirect Month Labor Hours Labor Costs January February March April 2,800 $4,300 2,300 4,260 2,900 4,180 3,100 4,420