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KAM company's total overhead costs at various levels of activity are presented below: Month January February March April Machine Hours 80,000 70,000 90,000 100,000 Total
KAM company's total overhead costs at various levels of activity are presented below: Month January February March April Machine Hours 80,000 70,000 90,000 100,000 Total overhead $222,000 $198,000 $246,000 $260,000 Assume that the total overhead costs above consist of utilities, supervisors' salaries and maintenance. The breakdown of these costs at the 70,000 machine hour level of activity is: Utilities (variable) $63,000 Supervisory salary (fixed) $16,000 Maintenance (semi-variable) $119,000 $198,000 Maintenance in April amounted to $154,000. Using the high-low method estimate a cost function for maintenance. O y = 53,300 - 2.067x 37,300 + 1.167x 37,300 - 1.167x O y = 53,300 + 2.067x
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