Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 6A-8 (Algo) High-Low Method; Predicting Cost [LO6-10] Nova Company's total overhead cost at various levels of activity are presented below: Machine- Total Overhead

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Problem 6A-8 (Algo) High-Low Method; Predicting Cost [LO6-10] Nova Company's total overhead cost at various levels of activity are presented below: Machine- Total Overhead Cost Month April May June July Hours 55,000 $ 201,500 45,000 $ 178,700 65,000 $ 224,300 75,000 $ 247,100 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 45,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 54,000 60,000 64,700 $ 178,700 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 $247,100 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $247,100 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 50,000 machine-hours? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Estimate how much of the $247,100 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $247,100 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) (Do not round intermediate calculations.) Maintenance cost in July Required 1 Required 2 >

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting A User Perspective

Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry

6th Canadian Edition

470676604, 978-0470676608

More Books

Students also viewed these Accounting questions

Question

i need 4 1 7 . .

Answered: 1 week ago

Question

Q4 What is the difference between automation and augmentation?

Answered: 1 week ago

Question

05 How does IS support decision steps?

Answered: 1 week ago