Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Crosshill Company's total overhead costs at various levels of activity are presented below: Total Overhead Month Machine-Hours Cost April 66,000 $115,000 May 56,000 $137,000 June
Crosshill Company's total overhead costs at various levels of activity are presented below: Total Overhead Month Machine-Hours Cost April 66,000 $115,000 May 56,000 $137,000 June 76,000 $ 358,000 July 86,000 $165,000 Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 56,000-machine-hour level of activity in May is as follows: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 27,000 24,000 86,000 $137,000 The company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $165,000 of overhead cost in July was maintenance cost. (Hint: To do this, first determine how much of the $165,000 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.) (Round the "Variable cost per unit" to 2 decimal places.) Maintenance cost in July 2. Using the high-low method, estimate a cost formula for maintenance. (Round the "Variable cost per unit" to 2 decimal places.) Machine- Hours Maintenance Cost High activity level Low activity level Change Variable cost element per MH Fixed cost element Y= 3. Express the company's total overhead cost in the form Y = a + bx. (Round the "Variable cost per unit" to 2 decimal places.) Variable Cost per Machine Hour Fixed Cost Utilities cost Supervisory salaries cost Maintenance cost Total overhead cost Y= 4. What total overhead cost would you expect to be incurred at an activity level of 71,000 machine-hours? (Round the "Variable cost per unit" to 2 decimal places.) Total overhead cost
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started