Exercise $5-36($Algo$)$ Methods of Estimating Costs: High$-$Low $($LO $5-1,2)$

Fiske Corporation manufactures a popular regional brand of kitchen utensils. The design and variety have been fairly constant over

the last three years. The managers at Fiske are planning for some changes in the product line next year, but first they want to $.$

understand better the relation between activity and factory costs as experienced with the current products. Discussions with the plant

supervisor suggest that overhead seems to vary with labor$-$hours, machine$-$hours, or both. The following data were collected from the

last three years of operations:

Required:

a$.$ Use the high$-$low method to estimate the fixed and variable portions of factory costs based on labor$-$hours.

b$.$ Managers expect the plant to operate at $25,000$ labor$-$hours next quarter. Assuming the relationship remains the same with the new

product line, what are the estimated quarterly factory costs?

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

Use the high$-$low method to estimate the fixed and variable portions of factory costs based on labor$-$hours.

Note: Round "Variable cost" answer to $2$ decimal places.