Problem 5A-8 (Algo) High-Low Method; Predicting Cost [LO5-10] Nova Company's total overhead cost at various levels...

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Problem 5A-8 (Algo) High-Low Method; Predicting Cost [LO5-10] Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine-Hours Total Overhead Cost 45,000 $ 176,800 35,000 $ 152,000 55,000 $ 201,600 65,000 $ 226,400 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 35,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 49,000 52,000 51,000 $ 152,000 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $226,400 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $226,400 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) 2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bx. 3. Express the company's total overhead cost in the form Y = a + bx. 4. What total overhead cost would you expect to be incurred at an activity level of 40,000 machine-hours? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Problem 5A-8 (Algo) High-Low Method; Predicting Cost [LO5-10] Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine-Hours Total Overhead Cost 45,000 $ 176,800 35,000 $ 152,000 55,000 $ 201,600 65,000 $ 226,400 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 35,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 49,000 52,000 51,000 $ 152,000 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $226,400 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $226,400 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) 2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bx. 3. Express the company's total overhead cost in the form Y = a + bx. 4. What total overhead cost would you expect to be incurred at an activity level of 40,000 machine-hours? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4