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Crosshill Company's total overhead costs at various levels of activity are presented below: Month April Total Machine- Overhead Hours Cost 52,000 $208,300 May 42,000$180,300 62,000
Crosshill Company's total overhead costs at various levels of activity are presented below: Month April Total Machine- Overhead Hours Cost 52,000 $208,300 May 42,000$180,300 62,000 $236,300 72,000 $264,300 June July Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 42,000-machine-hour level of activity in May is as follows: $67,200 Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) 43,000 70,100 Total overhead cost 180,300 $ The company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $264,300 of overhead cost in July was maintenance cost. (Hint: To do this, first determine how much of the $264,300 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.) (Do not round intermediate calculations.) Maintenance cost in July 2. Using the high-low method, estimate a cost formula for maintenance. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) Machine- Maintenance Hours Cost High activity level Low activity level Change 0 $ 0 per MH Variable cost element Fixed cost element X 3. Express the company's 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.) Variable Cost per Machine- Hour Fixed Cost Utilities cost Sunervisory
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