Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ola Companys total overhead cost at various levels of activity are presented below: Month Machine Hours Total Overhead Cost September 140,000.00 $ 396,000.00 October 120,000.00

Ola Companys total overhead cost at various levels of activity are presented below: Month Machine Hours Total Overhead Cost September 140,000.00 $ 396,000.00 October 120,000.00 $348,000.00 November 160,000.00 $444,000.00 December 180,000.00 $492,000.00 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 120,000 machine-hour level of activity is: ANTIGEN RT PCR AIR Total Sales 10.00 200,000.00 12.50 500,000.00 30.00 300,000.00 1,000,000.00 Variable Manufacturing Costs 7.50 150,000.00 4.38 175,000.00 15.00 150,000.00 475,000.00 Contribution Margin 2.50 50,000.00 8.13 325,000.00 15.00 150,000.00 525,000.00 Fixed Costs 530,000.00 Net Operating Income (Loss) (5,000.00) Utilities (Variable) $ 96,000.00 Supervisory Salaries (Fixed) 42,000.00 Maintenance (Mixed) 210,000.00 Total Overhead Cost $ 348,000.00 Ola Companys management wants to break down the maintenance cost into variable and fixed cost elements. Required: 21. Estimate how much of the $492,000 of overhead cost in December was maintenance cost. 22. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bX 23. Express the companys total overhead cost in the form Y = a + bX

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance And Accounting For Business

Authors: Bob Ryan

1st Edition

9781861529930

More Books

Students also viewed these Accounting questions