The Shapely Company uses the high-low method to determine its cost equation. The following information was gathered for the past year: Busiest month (June) Slowest (December) Machine Direct Labor Hours Costs 14,750 $770,000 month 9,750 $620,000 If Shapely expects to use 12,000 machine hours next month, what are the estimated direct labor costs? A) $687,500 B) $1,008,260 C) $510,000 D) $400,969.

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 1CE: The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:...
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The Shapely Company uses the high-low method to determine its
cost equation. The following information was gathered for the
past year:
Busiest month (June)
Slowest
(December)
Machine
Direct
Labor
Hours
Costs
14,750
$770,000
month
9,750
$620,000
If Shapely expects to use 12,000 machine hours next month, what
are the estimated direct labor costs?
A) $687,500
B) $1,008,260
C) $510,000
D) $400,969.
Transcribed Image Text:The Shapely Company uses the high-low method to determine its cost equation. The following information was gathered for the past year: Busiest month (June) Slowest (December) Machine Direct Labor Hours Costs 14,750 $770,000 month 9,750 $620,000 If Shapely expects to use 12,000 machine hours next month, what are the estimated direct labor costs? A) $687,500 B) $1,008,260 C) $510,000 D) $400,969.
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