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Can you please help answer the required questions 1-4? PROBLEM 2-20 High-Low Method; Predicting Cost [LO 2-4, LO 2-5 Nova Company's total overhead cost at
Can you please help answer the required questions 1-4?
PROBLEM 2-20 High-Low Method; Predicting Cost [LO 2-4, LO 2-5 Nova Company's total overhead cost at various levels of activity are presented below: Total Month Machine-Hours Overhead Cost May.. June July 70,000 60,000 80,000 90,000 $198,000 $174,000 $222,000 $246,000 Assume that the total overhead cost above consists of utilities, supervisory salaries, and main- tenance. The breakdown of these costs at the 60,000 machine-hour level of activity is: Utilities (variable) he $ 48,000 21,000 105,000 $174,000 . Maintenance (mixed).. Total overhead cost.._. . . . Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Etimate how much of the $246,000 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $246.000 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) 2. Using the high-low method, estimate a cost formula for maintenance. 3. Express the company's total overhead cost in the linear equation form Y a + bX. 4. What total overhead cost would you expect to be incurred at an activity level of 75,000 machine-hours Step by Step Solution
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