Question
Nova Company's total overhead costs at various levels of activity follow: Machine- Total Overhead Hours Month April 78,000 Costs $ 214,000 May June July
Nova Company's total overhead costs at various levels of activity follow: Machine- Total Overhead Hours Month April 78,000 Costs $ 214,000 May June July 115,500 286,000 96,000 106,000 238,000 246,640 Assume that the total overhead costs consist of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 78,000 machine-hour level of activity is as follows: Utilities (V) Supervisory salaries (F) Maintenance (M) Total overhead costs V variable; F fixed; M = mixed. $ 48,640 22,600 142,760 $214,000 Nova Company's management wants to break the maintenance cost down into its basic variable and fixed cost elements. Required: 1. As shown, overhead costs in May amounted to $286,000. Determine how much of this consisted of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $286,000 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs!) (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Maintenance cost 2. By means of the high-low method, estimate a cost formula for maintenance. (Do not round intermediate calculations. Round
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