Paul Cable source makes cables. Discussions with management suggest that Overhead seems to vary with labor hours,
Question:
Paul Cable source makes cables. Discussions with management suggest that Overhead seems to vary with labor hours, machine hours or both. The following data was collected for last years operations
Month Labor hr. Machine hr. Overhead Cost
1 2999 8020 $500,000.00
2 4500 8888 $567,919.00
3 3456 6500 $567,939.00
4 3422 6399 $567,959.00
5 3400 7777 $567,979.00
6 3244 7677 $567,999.00
7 3678 7899 $568,019.00
8 3456 6334 $501,000.00
9 3212 6789 $568,059.00
10 3344 7899 $568,079.00
11 3777 7566 $568,099.00
12 4506 7455 $568,119.00
a. Use the high low method to calculate the fixed and variable portions of overhead based on machine hours
b. Use the high low method to calculate the fixed and variable portions of overhead based on labor hours
c. If management estimates average Machine hours per month to be 7300 hours estimate the total fixed and variable overhead costs
d. If management estimates average labor hours per month to be 3600 hours estimate the total fixed and variable overhead costs
Expert Answer:
d If management estimates average labor hours per month to be 3600 hours estimate the total fixed an... View the full answer
