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ABC Company's total overhead costs at various levels of activity are presented below: March April Machine hours 60,000 50,000 70,000 80,000 Total overhead costs $216,800
ABC Company's total overhead costs at various levels of activity are presented below: March April Machine hours 60,000 50,000 70,000 80,000 Total overhead costs $216,800 194,000 239,600 262,400 May June Assume that the overhead costs above consist of utilities, supervisory salaries, and maintenance. At the 50,000-machine-hour level of activity, these costs are presented below: Utilities (V) Supervisory salaries (F) Maintenance (M) Total overhead costs $54,000 62,000 78,000 $194.000 V = Variable, F = Fixed, M = Mixed The company wants to break down the maintenance cost into its basic variable and fixed cost elementsh Required: a) Estimate the maintenance cost for June. b) Use the hiah-low method to estimate the cost formula for maintenance cost. Assume that the overhead costs above consist of utilities, supervisory salaries, and maintenance. At the 50,000-machine-hour level of activity, these costs are presented below. Utilities (V) Supervisory salaries (F) Maintenance (M) Total overhead costs $54,000 62.000 78.000 $194,000 V = Variable, F = Fixed, M = Mixed The company wants to break down the maintenance cost into its basic variable and fixed cost elements. Required: a) Estimate the maintenance cost for June. b) Use the high-low method to estimate the cost formula for maintenance cost. c) Estimate the total overhead cost at an activity level of 55,000 machine hours, using the separate estimates you obtained for its components. d) Estimate the total overhead cost at an activity level of 55,000 machine hours, independent of the separate estimates you obtained for its components
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