Question
Crosshill Companys total overhead costs at various levels of activity are presented below: Month Machine-Hours Total Overhead Cost April 47,000 $207,110 May 37,000 $179,810 June
Crosshill Companys total overhead costs at various levels of activity are presented below: Month Machine-Hours Total Overhead Cost April 47,000 $207,110 May 37,000 $179,810 June 57,000 $234,410 July 67,000 $261,710 Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 37,000-machine-hour level of activity in May is as follows: Utilities (variable) $ 55,500 Supervisory salaries (fixed) 61,000 Maintenance (mixed) 63,310 Total overhead cost $ 179,810 The company wants to break down the maintenance cost into its variable and fixed cost elements.
Required: 1. Estimate how much of the $261,710 of overhead cost in July was maintenance cost. (Hint: To do this, first determine how much of the $261,710 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.) (Do not round intermediate calculations.)
MAINTAINENCE COST IN JULY-
2. Using the highlow method, estimate a cost formula for maintenance. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.)
Machine hours | Maintanence cost | |
High Activity Level | ||
Low Activity Level | ||
Change | 0 | 0 |
Variable Cost Element | per Mh | |
Fixed Cost Elements |
Y=_____+______X
3. Express the companys 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.)
|
Y=_____+_____X 4. What total overhead cost would you expect to be incurred at an activity level of 42,000 machine-hours? (Do not round intermediate calculations.) |
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