Compute the overhead cost per labor hour

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Problem - Bob Jones owns a catering company that stages banquets and parties for both individuals and companies. The business is seasonal, with heavy demand during the summer months and year-end holidays and light demand at other times. Bob has gathered the following cost information from the past year:

Month

Labor Hours

Overhead Costs

January

2,500

$54,217

February

2,946

61,661

March

3,003

63,220

April

4,215

67,860

May

4,695

67,704

June

5,653

76,668

July

6,623

74,236

August

7,500

79,364

September

7,222

75,480

October

4,527

71,400

November

3,148

65,856

December

6,764

73,724

Total

58,796

$831,390

a. Using the high-low method, compute the overhead cost per labor hour and the fixed overhead cost per month.

b. Bob has booked 2,946 labor hours for the coming month. How much overhead should he expect to incur?

Reference no: EM131747879

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