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Exercise 4 Servgual Company is the Malaysian manufacturing company whose total overhead costs uctuate somewhat from year to year according to the nu machinehours worked
Exercise 4 Servgual Company is the Malaysian manufacturing company whose total overhead costs uctuate somewhat from year to year according to the nu machinehours worked in its production facility. These costs at high and levels of activity over recent years are given below: Level of Activity Low High Machinehours 00,000 00,000 Total factory overhead costs Riviat RMElEilil The factory overhead costs above consist of indirect materials. re maintenance. The company has analyzed these costs at the 00,000 ma hours level of activity as follows: Indirect materials {variable} Rlvl00,000 Rent (fixed) Ritii Maintenance [raised] RM54 000 Total factory overhead costs Mudatl] For planning purposes, the company wants to break down the maintenanc into its variable and fixed cost elements. REQUIRED: (a) Estimate how much of the factory overhead cost of RM312,000 at th level of activity above consists of maintenance cost. (b) Using the high-low method of cost analysis, estimate a cost formu maintenance. (c) What total overhead costs would you expect the company to incur operating level of 05.000 machinehours
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