1.High-low method

The following information is available regarding the total manufacturing overhead costs of Paymore, Inc., for five months in 2012:

Machine Hours Mfg Overhead Cost

February 6,900 $6,250

March 5,000 $6,250

April 6,300 $6,025

May 9,333 $7,975

June 6,833 $6,050

(a) Using the high-low method, compute the following:

(1) The variable element of overhead cost per machine-hour:

$____________________ per machine-hour

(2) The fixed element of monthly overhead cost: $__________________

(b) Use the cost relationship determined in part a to estimate the total manufacturing overhead costs for July 2012, given that 7,250 machine-hours are scheduled. $___________________