Problem - The Company wants to break down the overhead cost into its basic variable and fixed cost elements. Management would like you to analyze their overhead costs as a function of machine hours using the high-low method, which is listed below:
|
|
Machine Hrs
|
OH Cost
|
|
Month
|
x
|
y
|
|
Jan
|
62
|
2,107
|
|
Feb
|
62
|
2,040
|
|
Mar
|
120
|
2,916
|
|
Apr
|
71
|
2,332
|
|
May
|
50
|
1,896
|
|
Jun
|
95
|
2,471
|
|
Jul
|
142
|
3,105
|
|
Aug
|
86
|
2,316
|
|
Sep
|
112
|
2,555
|
|
Oct
|
136
|
2,780
|
|
Nov
|
85
|
2,061
|
|
Dec
|
103
|
2,910
|
|
Jan
|
96
|
2,835
|
|
Feb
|
101
|
2,715
|
|
Mar
|
53
|
1,986
|
Requirements - (Round off the variable cost per direct labor hour to the nearest cent and the fixed cost per month to the nearest dollar.) Show your work.
Use the high-low method to estimate the cost formula for overhead cost?