Question
Hello can you answer questions number 3 and 4 please and I need an explain thank you Nova Companys total overhead cost at various levels
Hello can you answer questions number 3 and 4 please and I need an explain
thank you
Nova Companys total overhead cost at various levels of activity are presented below:
Month | Machine-Hours | Total Overhead Cost |
---|---|---|
April | 51,000 | $ 174,390 |
May | 41,000 | $ 151,490 |
June | 61,000 | $ 197,290 |
July | 71,000 | $ 220,190 |
Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 41,000 machine-hour level of activity is:
Utilities (variable) | $ 49,200 |
---|---|
Supervisory salaries (fixed) | 43,000 |
Maintenance (mixed) | 59,290 |
Total overhead cost | $ 151,490 |
Nova Companys management wants to break down the maintenance cost into its variable and fixed cost elements.
Required:
1. Estimate how much of the $220,190 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $220,190 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.)
2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bX.
3. Express the companys total overhead cost in the form Y = a + bX.
4. What total overhead cost would you expect to be incurred at an activity level of 46,000 machine-hours?
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.)
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Q4
What total overhead cost would you expect to be incurred at an activity level of 46,000 machine-hours? (Do not round intermediate calculations.)
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