Crosshill Company's total overhead costs at various levels of activity are presented below:

MonthMachine-HoursTotal Overhead CostApril66,000$135,000May56,000$135,000June76,000$318,000July86,000$184,000

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)$31,000Supervisory salaries (fixed)26,000Maintenance (mixed)78,000Total overhead cost$135,000

The company wants to break down the maintenance cost into its variable and fixed cost elements.

Required:

1.Estimate how much of the $184,000 of overhead cost in July was maintenance cost. (Hint:To do this, first determine how much of the $184,000 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.)

2.Using the high-low method, estimate a cost formula for maintenance.(Round the "Variable cost per unit" to 2 decimal places.)

3.

Express the company's total overhead cost in the formY = a + bX.(Round the "Variable cost per unit" to 2 decimal places.)

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.)

Prev

Question3of3Total

3of3

Visit question map

This is the last question in the assignment. To submit, use Alt + S. To access other questions, proceed to the question map button.

Next