In June, Duke & Duchess expects to manufacture 18,000 units. Using the high-low method, compute the total estimated manufacturing overhead for June.

Question

Quizplus · Accepted Answer

The high-low method is used to estimate variable costs. In this case, the variable cost is manufacturing overhead. The high-low method uses the highest and lowest levels of activity to calculate the variable cost per unit. The variable cost per unit is then multiplied by the expected level of activity to calculate the total variable cost. In this case, the highest level of activity is 20,000 units and the lowest level of activity is 15,000 units. The variable cost per unit is $2.78. The expected level of activity is 18,000 units. The total variable cost is $65,278.

In June, Duke & Duchess Expects to Manufacture 18,000 Units