Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine- Hours 53,000 43,000 63,000 73,000 Total Overhead Cost $ 200, 360 $177,160 $ 223,560 $ 246, 760 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 43,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 47,300 63,000 66,860 $177,160 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 $246,760 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $246,760 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 48,000 machine-hours? 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 $246,760 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $246,760 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 48,000 machine-hours? X Answer is not complete. 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. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) Y= $ 16,400 + $ 1.12 X X Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Express the company's total overhead cost in the form Y = a + bx. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) Variable Cost per Fixed Cost Machine-Hour 1.20 Utilities cost Supervisory salaries cost Maintenance cost Total overhead cost 1.12 X 2.32 $ 70,000 X 16,400 X 86,400 S Y= $ 86,400 $ 2.32 X Required 2 Required 4 > 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 $246,760 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $246,760 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 48,000 machine-hours? X Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 What total overhead cost would you expect to be incurred at an activity level of 48,000 machine-hours? (Do not round intermediate calculations.) Total overhead cost
