Exercise 5-36 (Algo) Methods of Estimating Costs: High-Low (LO 5-4) 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 sa in a Labor- Hours 725 720 685 740 775 765 740 725 700 795 675 710 Machine- Hours 1,354 1.418 1,521 1,450 1,596 1,577 1.383 1,306 1,455 1.536 1,286 1,608 Overhead Costs $102,761 103, 754 109,943 108, 364 116, 159 114,411 106, 902 102, 155 106, 454 113,182 103,567 117,091 Required: .. 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