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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
1 720 1,359 $ 102,797
2 710 1,405 103,880
3 675 1,526 109,975
4 750 1,461 108,240
5 785 1,592 116,202
6 750 1,577 114,524
7 740 1,383 106,987
8 725 1,309 102,065
9 700 1,456 106,378
10 795 1,540 113,099
11 670 1,294 99,749
12 715 1,612 111,992

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.)

b. Managers expect the plant to operate at a monthly average of 1,500 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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