Manitoba Factory makes metal pipes for building. The company's accountant likes to estimate overhead costs...

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Accounting

Manitoba Factory makes metal pipes for building. The company's accountant likes to estimate overhead costs for the year 2022. To help him understand how costs behave in the company's manufacturing process he wants to separate fixed from variable costs. Data for the past six months are as follows:

 

 

Overhead

Machine

Month

cost

hours

July

$17,226

485

August

16,848

420

September

17,329

426

October

19,570

520

November

21,882

640

December

20,908

562


Required (round to 2 decimal places):

 

 

 

  1. Using the high low method, calculate the fixed cost component of overhead and the variable rate per machine hour.
  2. What would be the cost formula that can be used to calculate total overhead cost?
  3. Assume that 775 hours of machine hours are likely to be used in the month, what would be the total overhead cost based on the above calculations.

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