Baxter Manufacturing Ltd has determined total factory overhead costs at both minimum and maximum levels of production — 100 000 machine hours and 150 000 machine hours respectively. The total factory overhead, made up of variable costs, mixed costs and fixed costs, was \($398\) 000 for 150 000 machine hours and \($323\) 000 for 100 000 machine hours. At an activity level of 100 000 machine hours, the total factory overhead consists of the following components.

Required
(a) Determine the fixed and the variable portion (rate per machine hour) of the mixed costs.
(b) What should be the total factory overhead cost for 120 000 machine hours?

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Fixed costs Variable costs Mixed costs $115.000 110 000 98 000 $323 000