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Problem 5A-8 (Algo) High-Low Method; Predicting Cost [LO5-10] 5 Nova Company's total overhead cost at various levels of activity are presented below. Total Month Machine-Hours Overhead Cost April 54,000 $203,700 May 44,000 $ 181,200 June 54.000 $ 226,200 July 74,000 $ 248,700 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 44,000 machine-hour level of activity is: Utilities (variable) 48,400 Supervisory salaries (fixed) 67,000 Maintenance (mixed) 65,800 Total overhead cost $ 181,200 Nova Company's manpgement wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $248,700 of overhead cost in July was maintenance cost (Hint to do this, it may be helpful to first determine how much of the $248,700 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 company's total overhead cost in the form Y-abx 4. What total overhead cost would you expect to be incurred at an activity level of 49,000 machine-hours? Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 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 Fixed Cost Hour Utilities cost Supervisory salaries cost Maintenance cost Total overhead cost $ $ 0 0.00 YE Required: 1. Estimate how much of the $248.700 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $248,700 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 Ya+bX. 3. Express the company's 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 49,000 machine-hours? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 What total overhead cost would you expect to be incurred at an activity level of 49,000 machine-hours? (Do not round Intermediate calculations.) Total overhead coat Check my work Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $248,700 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $248,700 consisted of utilities and supervisory salories. Think about the behavior of variable and fixed costs.) 2. Using the high-low method, estimate a cost formula for maintenance in the form Ya+bx 3. Express the company's 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 49,000 machine-hours? Complete this question by entering your answers in the tabs below. Required: Required 2 Required 3 Required 4 Estimate how much of the $248,700 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $248,700 consisted of utilities and supervisory salaries, Think about the behavior of variable and fixed costs.) (Do not round intermediate calculations.) Maintenance cost in July $ 100,300 Required 1 Required 2 >
