Echeverria SA is an Argentinian manufacturing company whose total factory overhead costs fluctuate somewhat from year to year according to the number of machine-hours worked in its production facility. These costs (in Argentinian pesos) at high and low levels of activity over recent years are given below:

Level of Activity

	Low		High
Machine-hours	50,400		67,200
Total factory overhead costs	236,840	pesos	263,720	pesos

The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 50,400 machine-hours level of activity as follows:

Indirect materials (variable)	60,480	pesos
Rent (fixed)	122,000
Maintenance (mixed)	54,360
Total factory overhead costs	236,840	pesos

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

Required:

1.

Estimate how much of the factory overhead cost of 263,720 pesos at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the 263,720 pesos cost consists of indirect materials and rent. Think about the behavior of variable and fixed costs.) (Do not round intermediate calculations. Omit the "pesos" sign in your response.)

Maintenance cost at high level of activity

pesos

2.	Using the high-low method, estimate a cost formula for maintenance. (X represent per machine-hour.)(Round the "Variable cost per machine-hour" to 2 decimal places and "Fixed cost" to the nearest whole number. Omit the "pesos" sign in your response.)

Y =

pesos

+

peso X

3.	What total overhead costs would you expect the company to incur at an operating level of 55,440 machine-hours? (Do not round intermediate calculations. Omit the "pesos" sign in your response.)

Total factory overhead cost

pesos