Field Legal Services is trying to determine the variable and fixed elements of its service overhead.The following data have been collected from recent activity:
$\begin{array} { l r r }
&\text { Total Service Overhead}&\text { Cases Worked}\
\text { March } & 22,900 & 112 \ \text { April } & 20,800 & 98 \ \text { May } & 26,400 & 138 \end{array}$
The formula for total service overhead costs is

Question

Field Legal Services is trying to determine the variable and fixed elements of its service overhead.The following data have been collected from recent activity: 
$\begin{array} { l r r } 
&\text { Total Service Overhead}&\text { Cases Worked}\
\text { March } & 22,900 & 112 \ \text { April } & 20,800 & 98 \ \text { May } & 26,400 & 138 \end{array}$
 The formula for total service overhead costs is

Quizplus · Accepted Answer

The fixed cost is calculated using the high-low method. The variable cost per case is ($26,400 - $20,800) / (138 - 98) = $140. The fixed cost is calculated by substituting the variable cost into one of the months: $22,900 - ($140 * 112) = $7,080.

Field Legal Services Is Trying to Determine the Variable and Fixed