Wimmer's Storage ran its freezer in February, a slow month, for 360 hours for a total cost of $57,600. In July, a peak month, the freezer ran for 720 hours for a total cost of $82,080.
Required:
a. Using the high-low method, determine the overhead cost equation for the department if hours of freezer use are used as the cost driver?
b. What is the estimated total cost at an operating level of 500 hours?

Question

Wimmer's Storage ran its freezer in February, a slow month, for 360 hours for a total cost of $57,600. In July, a peak month, the freezer ran for 720 hours for a total cost of $82,080. 
Required:
a. Using the high-low method, determine the overhead cost equation for the department if hours of freezer use are used as the cost driver?
b. What is the estimated total cost at an operating level of 500 hours?

Quizplus · Accepted Answer

The Answer of Wimmer's Storage ran its freezer in February, a slow month, for 360 hours for a total cost of $57,600. In July, a peak month, the freezer ran for 720 hours for a total cost of $82,080. 
Required:
a. Using the high-low method, determine the overhead cost equation for the department if hours of freezer use are used as the cost driver?
b. What is the estimated total cost at an operating level of 500 hours?

Wimmer's Storage Ran Its Freezer in February, a Slow Month