Question
Adriana Corporation manufactures football equipment. In planning for next year, the managers want to understand the relation between activity and overhead costs. Discussions with the
Adriana Corporation manufactures football equipment. In planning for next year, the managers want to understand the relation between activity and overhead costs. Discussions with the plant supervisor suggest that overhead seems to vary with labor-hours, machine-hours, or both. The following data were collected from last year's operations. Month Labor-Hours 715 710 685 735 780 1 2 3456789GHA 10 11 12 760 735 735 715 795 680 710 Machine-Hours 1,361 1,419 1,523 1,446 1,591 1,571 1,380 1,314 1,454 1,540 1,290 1,610 Overhead Costs $ 102,608 103,842 109,929 108,391 116, 247 114,402 106,937 102,081 106,498 113,108 100,385 113,025 Required: a. Use the high-low method to estimate the fixed and variable portions of overhead costs based on machine-hours. b. Managers expect the plant to operate at a monthly average of 1,500 machine-hours next year. What are the estimated monthly overhead costs, assuming no inflation? Complete this question by entering your answers in the tabs below.
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