Respuesta :
a. Using the 8th and 12th months as the low and high figures, the fixed and variable portions of overhead costs based on machine hours are calculated as follows:
Month Machine hours Cost
8 6,530 $510,470
12 8,020 $564,210
Difference 1,490 $53,740
Variable cost = $36.07 ($53,740/1,490) per machine hour
Using the 12th month, the fixed cost = $274,928.60 ($564,210 - (8,020 x $36.07).
b. Assuming no inflation next year, the monthly estimated overhead costs are $545,454 (7,500 x $36.07 + $274,928.60).
What is the high-low method?
The High and Low Method is a costing method that splits the Fixed and Variable costs by studying cost variability.
Though, a subjective approach, the high and low method is employed for their simplicity. The other more complex method is regression method.
Data and Calculations:
Month Labor-Hours Machine-Hours Overhead Costs
1 3,625 6,775 $513,435
2 3,575 7,035 518,960
3 3,400 7,600 549,575
4 3,700 7,265 541,400
5 3,900 7,955 581,145
6 3,775 7,895 572,320
7 3,700 6,950 535,110
8 3,625 6,530 510,470
9 3,550 7,270 532,195
10 3,975 7,725 565,335
11 3,375 6,490 503,775
12 3,550 8,020 564,210
Learn more about the High-Low method of costing at https://brainly.com/question/14107176