Question - Anka Company manufactures and sells specialty items. The following representative direct labor-hours and production costs are provided for a four-month period:
|
Month
|
Hrs. Direct Labor
|
Production Costs
|
|
January
|
3,000
|
$ 45,000
|
|
February
|
4,500
|
52,500
|
|
March
|
7,000
|
81,000
|
|
April
|
4,000
|
45,000
|
|
Total
|
18,000
|
$223,500
|
A. Using the high-low method, determine the variable cost per direct labor hour and monthly fixed cost.
B. Calculate total monthly production costs for May using the high-low method, assuming the direct labor hours for May are expected to be 4,800.