Computing overhead cost equation-high-low method

Reference no: EM13141581

Patrick Ross, the president of Ross's Wild Game Company, has asked for information about the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed and how much is variable. The following data are the only records available:

Month Machine-hours Overhead Costs ($)

February 1,700 20,500

March 2,800 22,250

April 1,000 19,950

May 2,500 21,500

June 3,500 23,950

Required:

Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver. Why might this not be the "best" method for this data? What would you recommend?

Reference no: EM13141581

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