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Please help to answer questions 1,2, and 3. Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year,
Please help to answer questions 1,2, and 3.
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: Level of Activity Low High 62,200 82,200 $36, 159,600 $40,519,600 Machine-hours Total factory overhead costs The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 62,200 machine-hours level of activity as follows: Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs $ 9,019,000 18,100,000 9,040, 600 $36,159, 600 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 $40,519,600 at the high level of activity consists of maintenance cost. Maintenance cost 2. Using the high-low method, estimate a cost formula for maintenance. 3. What total overhead costs would you expect the company to incur at an operating level of 67,200 machine-hours? Total factory overhead costsStep by Step Solution
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