Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine- Hours 54,000 44,000 64,000 74,000 Total Overhead Cost $ 192,820 $ 167,520 $ 218, 129 $ 243, 420 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 44,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 61,600 41,000 64,920 $167,520 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 $243,420 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $243,420 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 49,000 machine-hours? Nova Company's management wants to break down the maintenance cost into its varfable and fixed cost elements. Required: 1. Estimate how much of the $243,420 of overhead cost in July was maintenance cost. (Hint to do this, it may be helpful tof determine how much of the $243,420 consisted of utilities and supervisory salaries. Think about the behavior of variable an 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 49,000 machine-hours? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Estimate how much of the $243,420 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $243,420 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) (Do not round intermediate calculations.) Maintenance cost in July Required 2 > 1. Esumate now much of the $243,420 of overhead cost in July was maintenance cost.( determine how much of the $243,420 consisted of utilities and supervisory salaries. Thin costs.) 2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a. 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 49,000 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bx. calculations. Round the "Variable cost per unit" to 2 decimal places.) X
