Asper Company has recently introduced budgeting as an integral part of its corporate planning process. An inexperienced member of the accounting staff was given the assignment of constructing a flexible budget for manufacturing overhead costs and prepared it in the format that follows: Percentage of Capacity Machine-hours 80% 47,200 100% 59,000 Utilities Supplies Indirect labour Maintenance Supervision $ 44,760 9,440 14,160 46,600 19,000 $ 54,200 11,800 17,700 52,500 19,000 Total manufacturing overhead cost $ 133,960 $ 155,200 The company assigns manufacturing overhead costs to production on the basis of standard machine-hours. The cost formulas used to prepare the budgeted figures above are relevant over a range of 80% to 100% of capacity in a month. The managers who will be working under these budgets have control over both fixed and variable manufacturing overhead costs. Required: 1. Use the high-low method to separate fixed and variable costs. (Round variable cost answers to 2 decimal places.) Overhead Item Variable Component Fixed Component Utilities Supplies Indirect labour Maintenance Supervision Totals 2. Come up with a single cost formula for all overhead costs based on your analysis in requirement 1 above. (Hint. Your cost formula should be of the form: y = a + bx.) (Round variable cost answer to 2 decimal places.) Y= X 3. During May, the company operated at 86% of machine-hour capacity. Actual manufacturing overhead costs incurred during the month were as follows: Utilities Supplies Indirect labour Maintenance Supervision $ 46,300 11,890 16,050 44,410 19,000 Total actual manufacturing overhead cost $137,650 Fixed costs had no budget variances. Prepare an overhead performance report for May. Include both fixed and variable costs in your report (in separate sections). Structure your report so that it shows only a spending variance for variable overhead. The company originally budgeted to work 47,200 machine-hours during the month; standard hours allowed for the month's production totalled 48,200 machine-hours. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round "Cost Formula per MH" answers to 2 decimal places.) Overhead Costs Cost Formula per MH Actual Cost 50,740 MH Flexible Budget 50,740 MH Spending Variance Variable overhead costs: Total variable overhead cost Fixed overhead costs: Total fixed overhead cost Total overhead cost