Burgess Company is developing a cost Method The following da

Burgess Company is developing a cost Method The following data have been collected for the past year: function for its maintenance costs using the High-Lowy Direct LabourMaintenance Costs Incurred QuarterHours 5,000 6,500 7,000 8.000 $ 745- 820 850 1,000» Required Calculate the following amounts: a. The Variable Cost per direct labour hour- b. The Fixed cost c. The estimated total cost for 9,000 direct labour hours d. The estimated total cost for 6,000 direct labour hours.v

Solution

High low cost method a Variable cost per unit = (1000-745) / (8000-5000) 0.085 Per hour b Fixed cost = 1000 - (8000*.085)   320 c 9000 hours Variable cost per hour Variable cost Fixed cost Total cost Overhead cost 0.085 765 320 1085 d 6000 hours Variable cost per hour Variable cost Fixed cost Total cost Overhead cost 0.085 510 320 830