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Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine Hours 55, eee 45,600 65, eee
Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine Hours 55, eee 45,600 65, eee 75,00 Total Overhead Cost $ 216,500 $ 191,900 $ 241, 100 $ 265,700 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 45.000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 63,00 68,00 60,990 $191,900 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 $265.700 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $265,700 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 = a + bx. 4. What total overhead cost would you expect to be incurred at an activity level of 50,000 machine-hours? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Estimate how much of the $255,700 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $265,700 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) (Do not round intermediate calculations.) Maintenance cost in July Required Required 2 >
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