Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Data for the past 8 months were collected:
Month Labor Cost Employee Hours
January $7,000 360
February $8,140 550
March $9,899 630
April $9,787 610
May $8,490 480
June $7,450 350
July $9,490 570
August $7,531 310
Total Labor Cost = $5,237 + ($7.40 x Employee Hours)
1) To calculate the variable cost we need to use the following formula:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (9,899 - 7,000) / (630 - 310)= $9.06 per unit
2) Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 9,899 - (9.06*630)= $4,191
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 7,000 - (9.06*310)= $4,191
3) direct labor hours= 4,000
Total Labor Cost = $5,237 + ($7.40 x Employee Hours)
Total Labor Cost= 5,237 + (7.4*4,000)= $34,837
