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Question 3 High-Low Method; Predicting Cost Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to
Question 3 High-Low Method; Predicting Cost Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Level of Activity Low High 50,000 75,000 14,250,000 $ 17,625,000 Machine-hours Total factory overhead costs $ The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 50,000 machine-hours level of activity as follows: $ Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs 5,000,000 6,000,000 3,250,000 14,250,000 $ For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements
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