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14 02:14:57 eBook Sawaya Co., Ltd., of Japan, is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according
14 02:14:57 eBook Sawaya Co., Ltd., of Japan, is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labour-hours worked in the factory. Total factory overhead costs (in Japanese yen, denoted ) at high and low levels of activity for recent years are provided below: Direct labour-hours Total factory overhead costs Level of Activity Low 96,000 12,420,000 High 146,000 15,269,000 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 96,000-hour level of activity as follows: Indirect materials (V) Rent (F) Maintenance (M) Total factory overhead costs V = variable; F = fixed; M = mixed. 5,184,000 4,992,000 2,244,000 12,420,000 To have data available for planning, the company wants to break the maintenance cost down into its variable and fixed cost elements. Required: 1. Estimate how much of the 15,269,000 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the 15,269,000 consists of indirect materials and rent. Think about the behaviour of variable and fixed costs!) Maintenance cost 14 0214:45 Required: 1. Estimate how much of the 15,269,000 factory overhead cost at the high level of activity consists of maintenance cost. (Hint To this, it may be helpful to first determine how much of the 15,269,000 consists of indirect materials and rent. Think about the behaviour of variable and fixed costs!) Maintenance cost eBook 2. By means of the high-low method of cost analysis, estimate a cost formula for maintenance. (Round the "Variable cost" to 2 decimal places.) Y= X 3. What total factory overhead costs would you expect the company to incur at an operating level of 68,000 direct labour-hours? (Do not round intermediate calculations.) Total factory overhead costs
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