Field Legal Services is trying to determine the variable and fixed elements of its service overhead. The following data have been collected from recent activity: $\begin{array}{lrr}
& \begin{array}{r}
\text { Total Service } \
\text { Overhead }
\end{array} & \text { Cases Worked } \
\text { March } & \$ 22,900 & 112 \
\text { April } & 20,800 & 98 \
\text { May } & 26,400 & 138 \
\hline
\end{array}$ The formula for total service overhead costs is
A) $5,600 + $140 per case.
B) $5,600 + $40 per case.
C) $7,823 + $134.62 per case.
D) $7,080 + $140 per case.

Question

Field Legal Services is trying to determine the variable and fixed elements of its service overhead. The following data have been collected from recent activity: $\begin{array}{lrr} 
& \begin{array}{r}
\text { Total Service } \
\text { Overhead }
\end{array} & \text { Cases Worked } \
\text { March } & \$ 22,900 & 112 \
\text { April } & 20,800 & 98 \
\text { May } & 26,400 & 138 \
\hline
\end{array}$ The formula for total service overhead costs is
A) $5,600 + $140 per case.
B) $5,600 + $40 per case.
C) $7,823 + $134.62 per case.
D) $7,080 + $140 per case.

Quizplus · Accepted Answer

Using the high-low method, the variable cost per case is calculated as ($26,400 - $20,800) / (138 - 98) = $140. The fixed cost is then calculated using one of the data points, for example, March: $22,900 - ($140 * 112) = $7,080. Therefore, the formula is $7,080 + $140 per case.

Field Legal Services Is Trying to Determine the Variable and Fixed