Chec 7 Problem 5A-8 (Algo) High-Low Method; Predicting Cost [LO5-10) 50 points Nova Company's total overhead cost at various levels of activity are presented below: eBook Total Machine- Overhead Month Hours Cost April 49,000 $196,090 May 39,000 $171,990 June 59,000 $220, 190 July 69,000 $244,290 Print Reference Reference Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 39,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 46,800 61,000 64,190 $171,990 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $244,290 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $244,290 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 in the form Y = a +bX. 3. Express the company's total overhead cost in the form Y = a + bx. 4. What total overhead cost would you expect to be incurred at an activity level of 44,000 machine-hours? Complete this question by entering your answers in the tabs below. Required Required Required Required 1 2 3 4 Estimate how much of the $244,290 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $244,290 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) (Do not round intermediate calculations.) Show less Maintenance cost in $ 95,020 July Complete this question by entering your answers in the tabs below. Required Required Required Required 1 2 3 4 Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bX. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) Show less Y= Complete this question by entering your answers in the tabs below. Required Required Required Required 1 2 3 4 Express the company's total overhead cost in the form Y = a + bX. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) Variable Cost per Machine- Fixed Hour Cost Utilities cost Supervisory salaries cost Maintenance cost Total overhead cost $ 0.00 $ 0 Y= Complete this question by entering your answers in the tabs below. Required Required Required Required 1 2 3 4 What total overhead cost would you expect to be incurred at an activity level of 44,000 machine-hours? (Do not round intermediate calculations.) Total overhead cost
