Sawaya Co., Ltd., 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 labor-hours worked in the factory. Total factory overhead costs (in Japanese yen, denoted ) at high and low levels of activity for recent years are given below:

	Level of Activity
	Low	High
Direct labor-hours	59,100	78,800
Total factory overhead costs	254,560	286,080

The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 59,100-hour level of activity as follows:

Indirect materials (variable)	70,920
Rent (fixed)	131,000
Maintenance (mixed)	52,640
Total factory overhead costs	254,560

To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements.

Requirement 1:

Estimate how much of the 286,080 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the 286,080 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!)

Maintenance cost

Requirement 2:

Using the high-low method, estimate a cost formula for maintenance where X represents the number of direct-labor hours.(Round variable cost per unit to 2 decimal places.Omit the "" sign in your response.)

Y =

+

X

Requirement 3:

What total factory overhead costs would you expect the company to incur at an operating level of 65,010 direct labor-hours?(Omit the "" sign in your response.)

Indirect materials
Rent
Maintenance:
Variable cost element
Fixed cost element
Total factory overhead cost