Waverley Welding Company provides welding services for a variety of industrial customers in the manufacturing, aerospace, and electronics industries The number of jobs completed from one month to the next varies considerably, and jobs differ in terms of the complexity of the welding requirements More complex jobs can take significantly longer to complete Management knows that overhead costs have a fixed and a variable component but, until now, has not attempted to determine which measure of activity should be used for planning and forecasting The table below shows data for the most recent fiscal year Management believes that either the number of jobs completed each month or the number of direct labour hours incurred each month could be used as the activity base However, they are not sure which is more appropriate Month Overhead Direct Labour Hours Jobs January $ 76,145 5,881 500 February $ 70,591 4,648 350 March $ 73,093 5,090 400 April $ 82,317 6,566 550 May $ 49,822 3,014 200 June $ 69,464 4,257 250 July $ 79,451 6,100 500 August $ 82,682 8,314 600 September $ 78,791 6,208 500 October $ 69,455 4,724 350 November $ 70,986 5,000 400 December $ 84,534 6,800 510 Overhead includes costs such as the maintenance supervisors salary, depreciation on the welding equipment, and indirect materials used on each job Electricity costs are also included in overhead and are significant since welding equipment consumes a relatively high amount of energy Waverley Welding also employs a mix of experienced and inexperienced welders Experienced welders are paid a higher hourly wage but are more efficient and tend to incur less wastage of indirect materials Inexperienced welders are of course paid less on a per hour basis but work more slowly and use more indirect materials Required 4 Use the highlow method to estimate a cost formula for maintenance, considering direct labour hours as the activity base (Round variable cost to 2 decimal place and fixed cost to the nearest dollar amount )

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Waverley Welding Company provides welding services for a variety of industrial customers in the manufacturing, aerospace, and electronics industries. The number of jobs completed from

Waverley Welding Company provides welding services for a variety of industrial customers in the manufacturing, aerospace, and electronics industries. The number of jobs completed from one month to the next varies considerably, and jobs differ in terms of the complexity of the welding requirements. More complex jobs can take significantly longer to complete. Management knows that overhead costs have a fixed and a variable component but, until now, has not attempted to determine which measure of activity should be used for planning and forecasting.

The table below shows data for the most recent fiscal year. Management believes that either the number of jobs completed each month or the number of direct labour-hours incurred each month could be used as the activity base. However, they are not sure which is more appropriate:

Month	Overhead		Direct Labour-Hours		Jobs
January	$	76,145		5,881	500
February	$	70,591		4,648	350
March	$	73,093		5,090	400
April	$	82,317		6,566	550
May	$	49,822		3,014	200
June	$	69,464		4,257	250
July	$	79,451		6,100	500
August	$	82,682		8,314	600
September	$	78,791		6,208	500
October	$	69,455		4,724	350
November	$	70,986		5,000	400
December	$	84,534		6,800	510

Overhead includes costs such as the maintenance supervisors salary, depreciation on the welding equipment, and indirect materials used on each job. Electricity costs are also included in overhead and are significant since welding equipment consumes a relatively high amount of energy. Waverley Welding also employs a mix of experienced and inexperienced welders. Experienced welders are paid a higher hourly wage but are more efficient and tend to incur less wastage of indirect materials. Inexperienced welders are of course paid less on a per hour basis but work more slowly and use more indirect materials.

Required:

4. Use the highlow method to estimate a cost formula for maintenance, considering direct labour hours as the activity base. (Round variable cost to 2 decimal place and fixed cost to the nearest dollar amount.)