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Question - Andrea Company manufactures and sells specialty items. The following representative direct labor-hours and production costs are provided for a four-month period:
Month
Hrs. Direct Labor
Production Costs
January
1,500
$22,500
February
2,000
26,250
March
3,500
40,500
April
22,500
Total
9,000
$111,750
Required - Using the HIGH-LOW METHOD, calculate the following:
1. Calculate the variable cost per direct labor hour.
2. Calculate the total fixed costs.
3. Estimate total monthly production costs for May using the high-low method, assuming the direct labor hours for May are expected to be 2,250.
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