Guy Spy, a private investigation firm, investigated 91 cases in December and had
ID: 2344578 • Letter: G
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 andfixed costcomponents of service overhead using the high-low method.
Determine the variable and fixed costs per case for December. Round to the nearest dollar where necessary.
Volume Cost Highest $ Lowest $ Difference $Explanation / Answer
Highst cost = $21,350
Lowest cost = $20,840
difference = $510
(21,350-20,840)/(97-91)= 510/6 = $85 variable cost per case
20,840 - 91*85 = $13,105 total fixed costs
13,105/91 = $144 fixed cost per case
Variable cost per case for Dec = $85
Fixed cost per case for Dec = $144
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