Question #1 & #2 only

ul plepared in (2) above. Why might it be misleading to show the fixed costs on a per unit basis? PROBLEM 1-20A High-Low Method; Predicting Cost [LOI-4, LOI-5] Nova Company's total overhead cost at various levels of activity are presented below: Month Machine-Hours Total Overhead Cost 70,000 60,000 80,000 90,000 $198,000 $174,000 $222,000 $246,000 July breakdown of these costs at the 60,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed). 21,000 Maintenance (mixed) 105,000 Total overhead cost .. $48,000 $174.000 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements Required I. Estimate how much of the $246,000 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $246,000 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) 2. 3. 4. Using the high-low method, estimate a cost formula for maintenance. Express the company's total overhead cost in the linear equation form Y- a + bx Whattotal overhead cost would you expect to be incurred at an activity level of 75,000