Reference no: EM132686764

High-low method Ames Automotive Company has accumulated the following data over a six-month period:

                                        Indirect Labor Hours                 Indirect Labor Costs

January........................... 400                                      $ 6,000
February . . . ....................... 500                                  7,000
March. . ........................... 600                                     8,000
April . . . ........................... 700                                          9,000
May . . . . . . . . . . . . . . . . . . . . . . . . . 800                           10,000
June . . . ........................... 900                                          11,000
                                              3,900                                        $51,000

Separate the indirect labor into its fixed and variable components, using the high-low method.

Question 1. Plot the data points on the graph and draw a line by visual inspection, indicating the trend shown by the data points.

Question 2. Determine the variable cost per unit and the total fixed cost from the information on the graph.