Question
Fountainhead produces agricultural irrigation equipment. During a year, the amount of overhead costs on a per-month basis varies in relation to the machine hours used
Fountainhead produces agricultural irrigation equipment. During a year, the amount of overhead costs on a per-month basis varies in relation to the machine hours used in a given year. The low for the past year was 4,590 hours, and the expense associated was $113,670. The high for the period was 6,900 hours, and the associated expense was $150,117. During the low month, the $113,670 in overhead costs consisted of indirect materials of $68,850 (a variable expense), rent of $34,250 (a fixed expense), and maintenance costs of $10,570 (a mixed expense).
1. | Given the breakdown of expenses in the low period, what are the estimated costs for (a) indirect materials, (b) rent, and (c) maintenance during the highperiod? |
2. | What is the cost function for maintenance costs? |
3. | What amount of maintenance costs would be expected with 7,600 machine hours of work? |
4. | What would be the total overhead costs at 7,600 machine hours? |
Please show the calculations.
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