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
1,361
$
102,782
2
705
1,415
103,865
3
690
1,518
109,983
4
735
1,452
108,299
5
775
1,584
116,251
6
745
1,578
114,517
7
740
1,387
106,912
8
725
1,300
102,123
9
710
1,457
106,341
10
790
1,541
113,033
11
680
1,294
103,448
12
715
1,612
116,804
Required:
a. Use the high-low method to estimate the fixed and variable portions of overhead costs based on machine-hours. (Round"Variable cost"answer to 2 decimal places.)
Variable Cost (per machine hour)=
Fixed Cost=
b. Managers expect the plant to operate at a monthly average of 1,700 machine-hours next year. What are the estimated monthly overhead costs, assuming no inflation? (Round"Variable cost"answer to 2 decimal places.)
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