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Month Machine-Hours April 47,000 Total Overhead Cost $ 193,070 37,000 $ 168,970 57,000 $ 217,170 67,000 $ 241,270 May June July Assume that the
Month Machine-Hours April 47,000 Total Overhead Cost $ 193,070 37,000 $ 168,970 57,000 $ 217,170 67,000 $ 241,270 May June July Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 37,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 44,400 63,000 61,570 $ 168,970 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 $241,270 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $241,270 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=a+bX. 4. What total overhead cost would you expect to be incurred at an activity level of 42,000 machine-hours? Complete this question by entering your answers in the tabs below.
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