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4 10 points Skipped Print Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the
4 10 points Skipped Print Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Level of Activity Low 61,500 $34,589,500 High 81,500 $39,049,500 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 61,500 machine-hours level of activity as follows: Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs $ 9,102,000 17,200,000 8,287,500 $34,589, 500 For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $39,049,500 at the high level of activity consists of maintenance cost. Maintenance cost 2. Using the high-low method, estimate a cost formula for maintenance. X 3. What total overhead costs would you expect the company to incur at an operating level of 66,500 machine-hours? Total factory overhead costs
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