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High-Low Analysis and Cost Behavior Broccoli Company's total overhead costs vary considerably, from month to month, based on direct labor hours. P6A - B Month
High-Low Analysis and Cost Behavior Broccoli Company's total overhead costs vary considerably, from month to month, based on direct labor hours. P6A - B Month August September October November December Labor Hours 3,000 3,400 2,000 2,800 3,600 Total Overhead $234,000 249,200 196,000 226,400 256,800 Their overhead costs consist of indirect labor, supervisor's salary and maintenance. A breakdown of these costs, for the month of October (their low month of activity), follows. Indirect labor (V) Supervisor's salary (F) Maintenance (M) Total overhead costs $60,000 80,000 56,000 $196,000 Required: 1) How much of the December overhead costs (their high month of activity) are maintenance? 2) Using the high-low method, estimate the cost formula for maintenance. 3) Using the high-low method, estimate the cost formula for total overhead. 4) What total overhead costs would you expect at 3,500 labor hours
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