(Analyzing mixed costs) Erin’s Stables determined that the total overhead rate for costing purposes is $6.70 per horse per day (referred to as an “animal day”). Of this, $6.30 is the variable portion. Cost information for two levels of monthiv activity within the relevant ransre are o-iven below:

a. Determine the fixed and variable values for each of the above overhead items and determine the total overhead cost formula.

b. Assume that the total overhead rate is based on expected annual capacity. What is this level of activity for the company?

c. Determine expected overhead costs at the expected annual capacity.

d. If the company raises its expected capacity to 3,000 animal days above the present level, calculate a new total overhead rate for product costing.LO1

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Overhead Cost: Indirect materials Indirect labor Maintenance Utilities All other 4,000 ANIMAL DAYS 6,000 ANIMAL DAYS $ 6,400 14,000 2,600 $ 9,600 20,000 3,400 2,000 3,000 3,800 5,400