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Please help me solve this managerial accounting question as I need help studying for my final Colby Limited is a manufacturing company whose total factory
Please help me solve this managerial accounting question as I need help studying for my final
Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machinehou rs Total factory overhead costs Level of Activity Low 70,500 High 100,500 $40, 508, 000 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 70,500 machine-hours level of activity as follows: Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs 8, 489,000 For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $40,508,000 at the high level of activity consists of maintenance cost. Maintenance cost 2. Using the highlow method, estimate a cost formula for maintenance. x 3. What total overhead costs would you expect the company to incur at an operating level of 75,500 machine-hours? otal facto overhead costs
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