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Hi John
Could you kindly help me to understand how Monthly fixed production overhead has been calculated?
The answer provided shown:
Monthly fixed production overhead $700,000 – (23,000x $20hr) $240,000 but I cannot see the logic.
Thanks and Regards
Gabbi
It is the high low method.
The total overhead is 700,000. The variable overhead is $20 per hour and so the total variable overhead is 23,000 x $20. The rest of the overheads must be the fixed overhead per month.
The free lecture on the high-low method will help you.
Dear John
Now it is clear, fully understood.
Thank you very much for your helpBest Regards
Gabbi
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