High$-$Low and Cost Formula

Harrison Company has accumulated the following total manufacturing overhead costs for two levels of activity $($within the relevant range$)$:

Low High

Activity $($direct labor hours$)80,000120,000$

Total manufacturing overhead $$936,000$ $$1,208,000$

The total overhead cost includes variable, fixed, and mixed costs. At $120,000$ direct labor hours, the total cost breakdown is as follows:

Variable cost $$528,000$

Fixed cost $320,000$

Semi$-$mixed cost $$360,000$

a$.$ Using the high$-$low method of cost analysis, determine the variable portion of the semi$-$variable cost per direct labor hour. Determine the total fixed cost component of the mixed cost.

Isolate mixed costs:

Do not use negative signs with your answers.

Low High

Total cost Answer

$936,000$

Answer

$1,208,000$

Less: Variable cost Answer

$352,000$

Answer

$528,000$

Fixed cost Answer

$320,000$

Answer

$320,000$

Total mixed cost Answer

$264,000$

Answer

$360,000$

High$-$Low Analysis:

Round variable portion per unit to two decimal places, if applicable.

Direct Labor Hours Total Mixed Cost $-$ Variable Portion $=$ Fixed Portion

High Answer

$120,000$

Answer

$360,000$

$-$ Answer

$=$ Answer

$0$

Low Answer

$80,000$

Answer

$264,000$

Answer

$0$

Answer

$0$

Difference Answer

$40,000$

Answer

$96,000$

Variable portion per unit: $Answer

$0$

b$.$ What should the total planned overhead cost be at $100,000$ direct labor hours?

Variable Cost Per Unit Fixed Costs

Variable cost Answer

$0$

Fixed cost Answer

$0$

Mixed:

Variable portion Answer

$0$

Fixed portion Answer

$0$

Totals: Answer

$0$

Answer

$0$

Total planned overhead for $100,000$ direct labor hours $Answer

$0$