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Question - Angie March 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. Angie has gathered the following cost information from the past year:
Month
Labor Hours
Overhead Costs
January
2,500
$48,950
February
1,800
46,440
March
1,900
47,440
April
3,000
50,600
May
3,300
53,390
June
4,500
56,550
July
6,800
63,940
August
6,500
61,150
September
5,400
56,920
October
3,500
54,250
November
2,100
49,230
December
5,500
57,850
Total
46,800
$646,710
(a) Identify the high and low points. Using the high-low method, compute the overhead cost per labor hour and the fixed overhead cost per month.
(b) Angie has booked 4,200 labor hours for the coming month. How much overhead should she expect to incur?
(c) If Angie books one more catering job for the month, requiring 350 labor hours, how much additional overhead should she expect to incur?
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