1. ABC Manufacturing has the following machine hours and production costs for the last six months of last year:

Month	Machine Hours				Production Cost
July		15,700			$	12,110
August		14,200				11,500
September		12,200				9,590
October		16,200				12,150
November		15,500				11,727
December		12,800				9,943

If the company expects to incur 11,300 machine hours in January, what will be the estimated total production cost using the high-low method?

2. The Shoal Company's manufacturing costs for the third quarter of 2019 were as follows: (CPA adapted)

Direct materials and direct labor	$	680,000
Other variable manufacturing costs		195,000
Depreciation of factory building and manufacturing equipment		78,000
Other fixed manufacturing costs		20,000

What amount should be considered product costs for external reporting purposes?

Multiple Choice

• $875,000

• $973,000

• $953,000

• $680,000