56. (Analyzing mixed costs) Frances’ Dairy determined that the total overhead rate for costing purposes is $6.70 per cow per day (referred to as an “animal day”).

Of this, $6.30 is the variable portion. Cost information for two levels of monthly activity within the relevant range follow:

4,000 6,000 Animal Days Animal Days Overhead cost:
Indirect materials $ 6,400 $ 9,600 Indirect labor 14,000 20,000 Maintenance 2,600 3,400 Utilities 2,000 3,000 All other 3,800 5,400

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 by 3,000 animal days above the present level, calculate a new total overhead rate for product costing.