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	80%	100%
Machine-hours	46,400	58,000
Utilities	$ 38,480	$ 46,600
Supplies	4,640	5,800
Indirect labour	9,280	11,600
Maintenance	40,560	45,200
Supervision	18,000	18,000
Total manufacturing overhead cost	$ 110,960	$ 127,200

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 highlow method to separate fixed and variable costs. (Round variable cost answers to 2 decimal places.)

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.)

3. During May, the company operated at 85% of machine-hour capacity. Actual manufacturing overhead costs incurred during the month were as follows:

Utilities	$ 40,020
Supplies	7,090
Indirect labour	11,170
Maintenance	38,370
Supervision	18,000
Total actual manufacturing overhead cost	$114,650

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 46,400 machine-hours during the month; standard hours allowed for the months production totalled 47,400 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.)