Colby 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		74,700			84,700
Total factory overhead costs	$	32,118,300		$	34,008,300

The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 74,700 machine-hours level of activity as follows:

Indirect materials (variable)	$	9,935,100
Rent (fixed)		14,100,000
Maintenance (mixed)		8,083,200
Total factory overhead costs	$	32,118,300

For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements.

Required:

1. Estimate how much of the factory overhead cost of $34,008,300 at the high level of activity consists of maintenance cost.

Maintenance cost=

2. Using the highlow method, estimate a cost formula for maintenance.

Y= + X

3. What total overhead costs would you expect the company to incur at an operating level of 79,700 machine-hours?

Total Factory Overhead Costs