Millielndustries manufactures two products, Monogram and Signature, for industrial use. Millie's manufacturing facility is highly automated, with very little direct labour being involved in the process. The company has decided that they would like to look more closely at the overhead and determine if they can get a better idea of the true cost of their products. The total direct labour cost in the last fiscal year was $1,500,000 and total manufacturing overhead in the last fiscal year was approximately $11,520,000. Relevant manufacturing overhead information for the past 12 months is provided in Exhibit I. After discussions with the production manager, you have determined that machine hours is the cost driver that most directly affects manufacturing overhead. Below is a summary of costs based on 40,000 hours per month. Supervisor salaries $125,000 Maintenance costs 293,000 Depreciation 30,000 Utilities 150,000 Management believes that supervisor salaries and depreciation costs are primarily fixed and approximately equal from month to month. Whereas utilities are primarily variable and maintenance cost is a mixed cost. Exhibit I Miscellaneous Cost Breakdown by Month Month Cost Machine Hours January $855,000 23,250 February 281,500 20,000 March 314,500 26,250 April 223,340 25,500 May 1,032,300 35,000 June 1,225,400 39,000 Julyr 1,043,500 33,250 August 1, 193,500 39,325 September 1,213,500 32,500 October 1, 133,000 40,000 November 555,500 23,250 December 542,550 21,000 Required: 1. Estimate how much of the overhead cost in February was maintenance cost. [2 marks] 2. Using the high-low method, estimate a cost formula for maintenance. {4 marks} 3. Provide the cost function for total overhead costs. [4 marks] 4. Assume Millie has decided to use the cost function you have developed in part 3 as a base to analyze costs for the upcoming scal year. Determine the cost function for total manufacturing overhead assuming the following: [4 rmrltsl '- Supervisor salaries will be approximately 11% higher than in the past year. t The utility company has announced that rates will be higher next year. The company believes this increase will cause utilities to increase by 4.5% per month. t The fixed portion of maintenance costs will increase by $15,011! per month and the variable component will increase by 2.5%. 5. Production nextJanuary is expected to be 28,000 hours. What total overhead cost would you expect? [2 marks]