Question
a) Estimate how much of the $228,000 of overhead cost in July was maintenance cost. ( Hint: To do this, first determine how much of
a) Estimate how much of the $228,000 of overhead cost in July was maintenance cost. (Hint: To do this, first determine how much of the $228,000 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.)
b)Using the highlow method, estimate a cost formula for maintenance. (Round the "Variable cost per unit" to 2 decimal places.)
c) Express the companys total overhead cost in the form Y = a + bX
d)What total overhead cost would you expect to be incurred at an activity level of 67,000 machine-hours?
Crosshill Company's total overhead costs at various levels of activity are presented below: Month April May June July Machine-Hours 62,000 52,000 72,000 83,000 Total Overhead Cost $149,000 $159,000 $382,000 $228,000 Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 52,000-machine-hour level of activity in May is as follows: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 37,000 21,000 101,000 $159,000 The company wants to break down the maintenance cost into its variable and fixed cost elementsStep by Step Solution
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