The following data was obtained from the books of the Caldwell Home Painting Company:
Month --------------------Overhead Costs --------------------------Direct Labor Hours
January ---------------------$2,400 -----------------------------------------------600
February ---------------------3,750 ------------------------------------------------800
March -------------------------1,800------------------------------------------------- 500
April---------------------------- 3,900----------------------------------------------- 900
May ----------------------------1,100------------------------------------------------ 200
A. Compute the fixed and variable components of the monthly overhead costs using the high-low method.
B. Using the equation developed in (a) above. Project the overhead costs for the month of august if the direct costs for the month of august if direct labor hours are projected to be 1100 hours for that month.