Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements.

Required:

Estimate how much of the factory overhead cost of $$37,945,000$ at the high level of activity consists of maintenance cost.

Maintenance cost

Using the high$-$low method, estimate a cost formula for maintenance.

$Y=$

What total overhead costs would you expect the company to incur at an operating level of $66,200$ machine$-$hours?

Total factory overhead costs

number of machine$-$hours worked in its production facility. These costs at high and low levels of activity over recent years are given

below:

The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the

$61,200$ machine$-$hours level of activity as follows:

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

Required:

Estimate how much of the factory overhead cost of $$37,945,000$ at the high level of activity consists of maintenance cost.

Using the high$-$low method, estimate a cost formula for maintenance.

$Y=$