Prince Companys total overhead costs at various levels of activity are presented below:

Month	Machine Hours	Total Overhead Cost
September	117,400	$603,788
October	88,600	$513,932
November	153,900	$717,668
December	161,700	$742,004

Assume that the overhead cost above consists of utilities, supervisory salaries, depreciation, and maintenance. The breakdown of these costs at the 88,600-machine-hour level of activity in October is as follows:

Utilities (variable)	$150,620
Supervisory salaries and depreciation (fixed)	200,000
Maintenance (mixed)	163,312
Total overhead cost	$513,932

The company wants to break down the maintenance cost into its variable and fixed cost elements.

Requied:

Estimate how much of the $742,004 of overhead cost in December was maintenance cost. (Hint: To do this, first determine how much of the $742,004 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.) (Do not round intermediate calculations.)

	Level of Activity
	88,600 MH	161,700 MH
Maintenance cost	$163,312

2. Using the highlow method, estimate a cost formula for maintenance. (Round variable cost to 2 decimal places and fixed cost to the nearest dollar amount.)

3. Waverley Welding Company provides welding services for a variety of industrial customers in the manufacturing, aerospace, and electronics industries. The number of jobs completed from one month to the next varies considerably, and jobs differ in terms of the complexity of the welding requirements. More complex jobs can take significantly longer to complete. Management knows that overhead costs have a fixed and a variable component but, until now, has not attempted to determine which measure of activity should be used for planning and forecasting. The table below shows data for the most recent fiscal year. Management believes that either the number of jobs completed each month or the number of direct labour-hours incurred each month could be used as the activity base. However, they are not sure which is more appropriate:

Month	Overhead		Direct Labour- Hours	Jobs
January	$	75,345	5,081	500
February	$	69,791	3,848	350
March	$	72,293	4,290	400
April	$	81,517	5,766	550
May	$	57,582	2,214	200
June	$	68,664	3,457	250
July	$	78,651	5,300	500
August	$	81,882	6,714	600
September	$	77,991	5,408	500
October	$	68,655	3,924	350
November	$	70,186	4,200	400
December	$	83,734	6,000	510

Overhead includes costs such as the maintenance supervisors salary, depreciation on the welding equipment, and indirect materials used on each job. Electricity costs are also included in overhead and are significant since welding equipment consumes a relatively high amount of energy. Waverley Welding also employs a mix of experienced and inexperienced welders. Experienced welders are paid a higher hourly wage but are more efficient and tend to incur less wastage of indirect materials. Inexperienced welders are of course paid less on a per hour basis but work more slowly and use more indirect materials.

Required:

Use the highlow method to estimate a cost formula for maintenance, considering direct labor hours as the activity base. (Round variable cost to 2 decimal place and fixed cost to the nearest dollar amount.)