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Prince Company's total overhead costs at various levels of activity are presented below. Total Machine Overhead Month Hours Cost September 119,500 $560,340 October 95,200 $484,524
Prince Company's total overhead costs at various levels of activity are presented below. Total Machine Overhead Month Hours Cost September 119,500 $560,340 October 95,200 $484,524 November 162,200 $693,564 December 168,100 $ 711,972 Assume that the overhead cost above consists of utilities, supervisory salaries, depreciation, and maintenance. The breakdown of these costs at the 95,200-machine. hour level of activity in October is as follows: $ 158,032 Utilities (variable) Supervisory salaries and depreciation (fixed) Maintenance (mixed) 152.000 174.492 Total overhead cost $484,524 The company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $711,972 of overhead cost in December was maintenance cost. (Hint: To do this, first determine how much of the $711,972 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 95,200 MH 168,100 MH $ 174,492 $ 246,014 Maintenance cost 2. Using the high-low method. estimate a cost formula for maintenance. (Round variable cost to 2 decimal places and fixed cost to the nearest dollar amount.) Y= 3. Express the company's total overhead cost in the form Y = a + bX. (Round variable cost to 2 decimal places and fixed cost to the nearest dollar amount.) 4. What total overhead cost would you expect to be incurred at an activity level of 105,200 machine-hours? (Do not round intermediate calculations.) Total overhead costs
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