Nova Companys total overhead cost at various levels of activity are presented below: Month Machine- Hours Total Overhead Cost April 52,000 $ 211,980 May 42,000
Nova Companys total overhead cost at various levels of activity are presented below:
| Month | Machine- Hours | Total Overhead Cost |
| April | | 52,000 | | $ | 211,980 |
| May | | 42,000 | | $ | 186,080 |
| June | | 62,000 | | $ | 237,880 |
| July | | 72,000 | | $ | 263,780 |
| |
Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 42,000 machine-hour level of activity is:
| | | |
| Utilities (variable) | $ | 63,000 |
| Supervisory salaries (fixed) | | 58,000 |
| Maintenance (mixed) | | 65,080 |
| Total overhead cost | $ | 186,080 |
| |
Nova Companys management wants to break down the maintenance cost into its variable and fixed cost elements.
Required:
1. Estimate how much of the $263,780 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $263,780 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 companys 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 47,000 machine-hours?
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 $263,780 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $263,780 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 47,000 machine-hours? Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Estimate how much of the $263,780 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $263,780 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) (Do not round Intermediate calculations.) Maintenance cost in July $ 127,573 Required 1 Required 2 > 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 $263,780 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $263,780 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 47,000 machine-hours? Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bx. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) Y = LUMUUUU UULUULUCULULU UUU CILJ determine how much of the $263,780 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixe 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 47,000 machine-hours? Answer is not complete. 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 Fixed Machine- Cost Hour Utilities cost Supervisory salaries cost Maintenance cost Total overhead cost $ 0.00 $ 0 Ya 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 $263,780 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $263,780 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 47,000 machine-hours? Answer is not complete. 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 47,000 machine-hours? (Do not round intermediate calculations.) Total overhead costs S 263,780 X
