Question
Angie March owns a catering company that stages banquets and parties for both individuals and companies. The business is seasonal, with heavy demand during the
Angie March owns a catering company that stages banquets and parties for both individuals and companies. The business is seasonal, with heavy demand during the summer months and year-end holidays and light demand at other times. Angie has gathered the following cost information from the past year:
Month Labor Hours. Overhead Costs
January 3,300. $51,750
February 2,600 49,240
March 2,700 50,240
April 3,800. 53,400
May 4,100. 56,190
June 5,300. 59,350
July 7,600 66,740
August 7,300 63,950
September. 6,200 59,720
October 4,300 57,050
November 2,900 52,030
December 6,300 60,650
Total 56,400 $680,310
(a) Identify the high and low points.
Activity Level $
High point ____________ $____________________
Low point ____________ $ ____________________
Using the high-low method, compute the overhead cost per labor hour and the fixed overhead cost per month. (Round variable cost to 2 decimal places, e.g. 15.25 and fixed cost to 0 decimal places, e.g. 5,275.)
Variable cost = ____________ per labor hour
Fixed cost =_____________________
(b) Angie has booked 4,200 labor hours for the coming month. How much overhead should she expect to incur?
Total cost = $_____________
(c) If Angie books one more catering job for the month, requiring 350 labor hours, how much additional overhead should she expect to incur?
Additional overhead = $__________
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