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Below are the overhead costs and labor hours for Smith & Co. Month Overhead Cost # of labor hours January $9,640 490 February $12,680 680
Below are the overhead costs and labor hours for Smith & Co.
Month | Overhead Cost | # of labor hours | ||||||
January | $9,640 | 490 | ||||||
February | $12,680 | 680 | ||||||
March | $11,080 | 580 | ||||||
April | $11,720 | 620 | ||||||
May | $13,000 | 700 | ||||||
June | $10,120 | 520 | ||||||
July | $8,840 | 440 | ||||||
August | $6,600 | 300 |
Required:
Using the high-low method:
1. Calculate the fixed cost of overhead. $
2. Calculate the variable rate per labor hour. $
3. Construct the cost formula for total overhead cost.
Total cost | = | Fixed cost | + | Variable cost |
= | $ | + | ($per hour X labor hours) |
4. The company is estimating that in September the labor hours will be 600. How much should they estimate to have in total overhead cost for September? $
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