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Nova Company's total overhead cost at various levels of activity are presented below. Total Machine- Overhead Bours Cont 49.000 5184,410 39,000 $158,510 Honth April
Nova Company's total overhead cost at various levels of activity are presented below. Total Machine- Overhead Bours Cont 49.000 5184,410 39,000 $158,510 Honth April May June July 59,000 $210,310 69,000 5236,210 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 39,000 machine-hour level of activity is: Utilities (variable) $58,500 Supervisory salarien (fixed) 43,000 57,010 $158,510. Maintenance (mixed) Total overhead cost 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 $236,210 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $236,210 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 Ya+bX 4. What total overhead cost would you expect to be incurred at an activity level of 44,000 machine-hours? Complete this question by entering your answers in the tabs below.
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