Accounting

Required: 9 1. Estimate how much of the factory overhead cost of $37,380,000 at the high level of activity consists of maintenance cost. Maintenance cost :07 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 87,000 machine-hours? Total factory overhead costs JUN tv AColby 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: Level of Activity Low High Machine-hours 82,000 92,000 Total factory overhead costs $35, 230, 000 $37, 380,000 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 82,000 machine-hours level of activity as follows: Indirect materials (variable) $12, 546, 000 Rent (fixed) 13 , 600, 000 Maintenance (mixed) 9 , 084, 000 Total factory overhead costs $35, 230, 000 For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: . Estimate how much of the factory overhead cost of $37,380,000 at the high level of activity consists of maintenance cost. Maintenance cost JUN 1 atv 4