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

Month	Machine-Hours	Total Overhead Cost
April	45,000	$ 182,900
May	35,000	$ 158,500
June	55,000	$ 207,300
July	65,000	$ 231,700

Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 35,000 machine-hour level of activity is:

Utilities (variable)	$ 42,000
Supervisory salaries (fixed)	58,000
Maintenance (mixed)	58,500
Total overhead cost	$ 158,500

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

Required:

1. Estimate how much of the $231,700 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $231,700 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 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 40,000 machine-hours?