last three years. The managers at Fiske are planning for some changes in the product line next year, but first they want to understand better the relation between activity and factory costs as experienced with the current products. Discussions with the plant supervisor suggest that overhead seems to vary with labor-hours, machine-hours, or both. The following data were collected from the last three years of operations:

Quarter	Machine-Hours	Labor-Hours	Factory costs
1	18,850	14,905	$ 3,388,671
2	18,590	15,477	3,425,136
3	17,480	16,720	3,617,144
4	19,240	15,983	3,573,240
5	21,280	17,501	3,812,284
6	19,630	17,369	3,777,312
7	19,240	15,290	3,531,726
8	18,850	14,366	3,369,102
9	18,460	15,994	3,512,487
10	20,670	16,995	3,730,734
11	17,550	14,278	3,324,915
12	18,460	17,644	3,723,786

Required:

1. Use the high-low method to estimate the fixed and variable portions of factory costs based on labor-hours.
2. Managers expect the plant to operate at 16,000 labor-hours next quarter. Assuming the relationship remains the same with the new product line, what are the estimated quarterly factory costs?

Required A

Use the high-low method to estimate the fixed and variable portions of factory costs based on labor-hours.

Note: Round "Variable cost" answer to 2 decimal places.

Variable cost (per labor-hour)	$118.50selected answer correct
Fixed cost	selected answer incorrect

• Required B

Managers expect the plant to operate at 16,000 labor-hours next quarter. Assuming the relationship remains the same with the new product line, what are the estimated quarterly factory costs?

Note: Round "Variable cost" to 2 decimal places.

Estimated quarterly factory costs

$4,950,972selected answer incorrect