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A companys total overhead cost at various levels of activity is presented below: Month Machine-Hours Total Overhead Cost March ...................................... 2,000 $18,000 April ......................................... 5,000

A companys total overhead cost at various levels of activity is presented below:

Month

Machine-Hours

Total Overhead Cost

March ......................................

2,000

$18,000

April .........................................

5,000

$28,500

May .........................................

6,000

$32,000

June ........................................

4,000

$25,000

Assume that the overhead cost above consists of direct materials, supervisory salaries, and utilities. The breakdown of these costs at the 6,000 machine-hour level of activity is as follows:

Direct Materials (variable) .............................

$12,000

Supervisory salaries (fixed) ...................

?

Utilities (mixed) .....................................

12,000

Total overhead cost ..............................

?

Suppose the company uses the high-low method to estimate a cost formula for utilities. What is the total utilities cost the company expects to incur at an activity level of 6,500 machine hours?

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