Using the high-low points method for supplies cost at different levels of activity. The following data involve the direct labor hours worked and the cost of supplies for eight months of 19X1 in the Joining Department of the Empire Company.

Instructions 1. Using the high-low points method, compute the variable rate per direct labor hour and the fixed cost per month. Show your computations.
2. In the month of January 19X2, 1,370 direct labor hours were worked in the Empire Company’s Joining Department. Compute the expected cost of supplies for the month.
3. In January 19X2 the cost of supplies in the Joining Department was $1,550. Does this indicate that the cost of supplies was well controlled? Explain.

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Direct Labor Hours Cost January 1,200 $1,480 February 1,080 1,432 March 1,290 1,516 April 1,400 1,562 May 1,450 1,580 June 1,300 1,521 July 1,100 1,440 August 1,020 1,402