Question

performed that The manager of the man laboratory facity at Urban Cortor interested in being able to predict the overhead co ach month for the lab. The manager beves that all overhead was with the number of cots romain meme each month ages of number of best performed the manager colected the blowing data for the even mors of the year C h oon to view the data) Use the ghow method to determine the laboratory's cos t for laboratory overhead Use you to predictab oy overhead 2.300 stare performed real month Let's begin by de g the formula that is used to calculate the variable cool (pel Data Table Number of Lab Tests Performed Focal Laboratory Overhead Costs

Answer 1

Answer

Change in costs / Change in lab tests = Variable costs

= 10,500 / 2,000

= 5.25

Calculations:

	Lowest range	Highest range
Cost	$         22,000	$          32,500
Lab tests	2,000	4,000

As per High Low Method,

Variable cost per lab cost = Change in costs / change in lab test

Variable cost per lab test = ($32500-$22000)/(4000-2000)

Variable cost per lab test = $10500/2000

Variable cost per lab test = $ 5.25

Fixed Cost = Total Cost - Variable Cost

Fixed Cost = Total Cost - (Variable Cost per hour * hours)

Fixed Cost = $32500-($5.25*4000)

Fixed Cost = $11,500