Problem 6A-8 High-Low Method; Predicting Cost [LO6-10] Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine- Hours 55,000 45,000 65,000 75,000 Total Overhead Cost $ 199,550 $ 176,850 $ 222,250 $ 244,950 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 56,000 66,850 $176,850 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 $244,950 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $244,950 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? utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 54,000 56,000 66,850 $176,850 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 $244,950 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $244,950 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 $244,950 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $244,950 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) (Do not round intermediate calculations.) Maintenance cost in July