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Savaya Co., Ud. of Japan, is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases
Savaya Co., Ud. of Japan, is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labour-hours worked in the factory. Total factory overhead costs (in Japanese yen, denoted 7 ) at high and low levels of activity for recent years are provided below: The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 88,000-hour level of activity as follows: V= varlable; F= fixed, M= mixed To have data avallable for planning, the company wants to break the maintenance cost down into its variable and fixed cost elements. Required: 1. Esimate how much of the =15,257,000 factory overhead cost at the high level of activity consists of maintenance cost, (Hint: To do this, it may be heipful to first determine how much of the $15,257,000 consists of indirect materials and rent. Think about the behaviour of variable and fixed costs!) of varlable and fixed costsl) 2. By means of the highi low method of cost analysis, estimate a cost formula for maintenance. (Round the "Voriable cost" to 2 decimal places.) 3. What totol foctory ovetiend casts would you expect the company to incur at an operating level of 64,000 direct labour-hours? (Do) not round intermedilate eniculations.)
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