a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost component of the mixed cost.

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P6-4A High-Low and Cost Formula
  Harrison Company has accumulated the following total manufacturing overhead costs for two levels of activity (within the relevant range):        
         
                             
      Low High                    
  Activity (direct labor hours) 90,000 130,000                    
  Total manufacturing overhead $484,000 $628,000                    
                             
  The total overhead cost includes variable, fixed, and mixed costs. At 130,000 direct labor hours, the total cost breakdown is as follows:          
                             
  Variable cost     $286,000                    
  Fixed cost   85,000                    
  Semi-mixed cost   $257,000                    
                             
  Required                          
  a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost component of the mixed cost.          
                             
  b. What should the total planned overhead cost be at 115,000 direct labor hours?                  

 

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