Adriana Corporation manufactures football equipment. In planning for next year, the managers want to understand...
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Accounting
Adriana Corporation manufactures football equipment. In planning for next year, the managers want to understand the relation between activity and overhead costs. Discussions with the plant supervisor suggest that overhead seems to vary with labor-hours, machine-hours, or both. The following data were collected from last year's operations:
Month
Labor-Hours
Machine-Hours
Overhead Costs
1
730
1,354
$
102,748
2
710
1,401
103,792
3
690
1,514
109,835
4
735
1,449
108,346
5
775
1,589
116,252
6
745
1,574
114,581
7
740
1,393
106,947
8
730
1,316
102,010
9
705
1,450
106,479
10
800
1,548
113,012
11
680
1,290
101,925
12
705
1,610
115,205
Required:
(a)
Use the high-low method to estimate the fixed and variable portions of overhead costs based on machine-hours. (Roundyourvariable costanswer to 2 decimal places.)
(b)
Managers expect the plant to operate at a monthly average of 1,400 machine-hours next year. What are the estimated monthly overhead costs, assuming no inflation?
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