Guy Spy, a private investigation firm, investigated 91 cases in December and had

Question

Guy Spy, a private investigation firm, investigated 91 cases in December and had the following costs: direct labor, $190 per case; and service overhead of $20,840. Service overhead for October was $21,150; for November, it was $21,350. The number of cases investigated during October and November was 93 and 97, respectively. Compute the variable and fixed cost components of service overhead using the high-low method.

VOLUME COST
Highest $_______
Lowest $_______
Difference $_______


Determine the variable and fixed costs per case for December. Round to the nearest dollar where necessary.

Variable cost per case for December: $_______
Fixed cost per case for December: $_______

Explanation / Answer

For the overhead, Highest cost =21350 Lowest cost=20840 Difference =510 Activity at highest cost=97 Activity at lowest cost=91 Difference=6 Hence, variable overhead cost=510/6=85 So, fixed overhead cost=20840 -91*85 =13105 Hence, in December, Total variable cost per case =85+190 = 275 Fixed cost per case =13105/91 =144.01

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