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High-Low Method

The Rams Company has provided the following information:

Month Factory Overhead Labor Hours

July $92,095 4,900

August 105,056 5,480

September 83,802 3,760

October 99,594 4,420

November 108,694 5,720

December 97,404 3,980

a. Using the high-low method, calculate the total fixed factory overhead cost and the variable factory overhead cost per direct labor hour.

b. Prepare the cost function.

c. What would the total factory overhead cost be at a level of 8,000 hours?

Solution Summary

The solution provides step by step method for the calculation of total fixed factory overhead cost and the variable factory overhead cost per direct labor hour using high-low method. Formula for the calculation is also included.

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