High-Low and Cost Formula

Harrison Company has accumulated the following total manufacturing overhead costs for two levels of activity (within the relevant range):

	Low	High
Activity (direct labor hours)	80,000	120,000
Total manufacturing overhead	$936,000	$1,208,000

The total overhead cost includes variable, fixed, and mixed costs. At 120,000 direct labor hours, the total cost breakdown is as follows:

Variable cost	$528,000
Fixed cost	320,000
Semi-mixed cost	$360,000

a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost component of the mixed cost.

Isolate mixed costs:

Do not use negative signs with your answers.

	Low	High
Total cost	Answer	Answer
Less: Variable cost	Answer	Answer
Fixed cost	Answer	Answer
Total mixed cost	Answer	Answer

High-Low Analysis: Round variable portion per unit to two decimal places, if applicable.

	Direct Labor Hours		Total Mixed Cost	-	Variable Portion	=	Fixed Portion
High	Answer		Answer	-	Answer	=	Answer
Low	Answer		Answer		Answer		Answer
Difference	Answer		Answer

Variable portion per unit: $Answer

b. What should the total planned overhead cost be at 100,000 direct labor hours?

	Variable Cost Per Unit	Fixed Costs
Variable cost	Answer
Fixed cost		Answer
Mixed:
Variable portion	Answer
Fixed portion		Answer
Totals:	Answer	Answer

Total planned overhead for 100,000 direct labor hours $Answer