Question 1

• Time: 10 minutes
• Total: 5 marks

Dundar Mifflin makes electronic products for the RCMP. The following data is for the first six months:

	Direct Labor Hours	Manufacturing Overhead
January	45,000	$295,000
February	59,900	$307,575
March	57,000	$323,000
April	58,000	$320,000
May	27,800	$158,600
June	29,000	$152,500

Required:

1. Use the high-low method to estimate the cost formula (3 marks)

2. Estimate the total overhead cost at an activity level of 41,000 machine hours, using the separate estimates you obtained for its components. (2 marks)