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Nova Companys total overhead cost at various levels of activity are presented below: Month Machine Hours Total Overhead Cost April 84,000 $197,100 May 74,000 $185,480
Nova Companys total overhead cost at various levels of activity are presented below: Month Machine Hours Total Overhead Cost April 84,000 $197,100 May 74,000 $185,480 June 94,000 $222,000 July 104,000 $247,580 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 74,000 machine-hour level of activity is: Utilities (variable) $ 45,880 Supervisory salaries (fixed) 19,000 Maintenance (mixed) 120,600 Total overhead cost $ 185,480 Nova Companys management wants to break down the maintenance cost into its variable and fixed cost elements Requirement 1: Estimate how much of the $247,580 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $247,580 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) (Omit the "$" sign in your response.) Requirement 2: Using the high-low method, estimate a cost formula for maintenance. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Requirement 3: Express the companys total overhead cost in the linear equation form Y = a + bX. (Round your answer to 2 decimal places. Omit the "$" sign in your response. Requirement 4: What total overhead cost would you expect to be incurred at an operating activity level of 89,000 machine-hours?(Omit the "$" sign in your response.)
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