Nova Companys total overhead cost at various levels of activity are presented below:

Month	Machine-Hours	Total Overhead Cost
April	50,000	$184,400
May	40,000	$160,000
June	60,000	$208,800
July	70,000	$233,200

Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 40,000 machine-hour level of activity is:

Utilities (variable)

$

52,000

Supervisory salaries (fixed)

45,000

Maintenance (mixed)

63,000

Total overhead cost

$

160,000

Nova Companys management wants to break down the maintenance cost into its variable and fixed cost elements.

Required:

1.

Estimate how much of the $233,200 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $233,200 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.)

maintenance cost in July____________

HIgh activity level	??????	??????
Low activity level	?????	????
Change	??????
Variable cost element		per Mh
Fixed Cost element

Y= ____ +_____X

3.

Express the companys total overhead cost in the linear equation form Y = a + bX. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.)

	Variable cost per
	Machine hour	Fixed Cost
Utilities cost
Supervisory Salary Cost
Maintenance cost
Total Overhead Cost

Y=____+ ___ X

4 What total overhead cost would you expect to be incurred at an activity level of 45,000 machine-hours? (Do not round intermediate calculations.)

Total overhead cost ___________