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Managerial Accounting

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Using the High-Low Method to Estimate Costs

MGRACT-MMCXFL

Springfield Company believes manufacturing overhead costs to be a mixed cost driven by direct labor hours. Six months of data are shown for these variables:

Month Cost Direct Labor Hours
January $40,000 3,500
February 24,400 2,000
March 31,280 2,450
April 36,400 3,000
May 44,160 3,900
June 42,400 3,740

Using the high-low method, what is the total estimated manufacturing overhead cost for a level of 2900 direct labor hours?

A

$\$30,160$

B

$\$33,760$

C

$\$35,160$

D

$\$36,400$