Question
6 Nova Company's total overhead cost at various levels of activity are presented below: 1.7 points eBook Print References Month April May June July
6 Nova Company's total overhead cost at various levels of activity are presented below: 1.7 points eBook Print References Month April May June July Machine-Hours Total Overhead Cost 52,000 $ 182,860 42,000 $ 160,060 62,000 $ 205,660 72,000 $ 228,460 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 42,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 50,400 52,000 57,660 $ 160,060 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $228,460 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $228,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) 2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bx. 3. Express the company's total overhead cost in the form Y = a + bx. 4. What total overhead cost would you expect to be incurred at an activity level of 47,000 machine-hours? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required: 1. Estimate how much of the $228,460 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $228,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) 2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bx. 3. Express the company's total overhead cost in the form Y = a + bx. 4. What total overhead cost would you expect to be incurred at an activity level of 47,000 machine-hours? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Estimate how much of the $228,460 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $228,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) Note: Do not round intermediate calculations. Maintenance cost in July
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