Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine- Hours 51,000 41,000 61,000 71,000 Total
Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine- Hours 51,000 41,000 61,000 71,000 Total Overhead Cost $ 208, 040 $ 182,640 $ 233, 440 $ 258, 840 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 41,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 53,300 63,000 66,340 $182,640 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elen Required: 1. Estimate how much of the $258,840 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $258,840 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 46,000 machine-hours
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started