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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
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 at high and low levels of activity for recent years are given below: Level of Low 65,700 High 87,600 Direct labor-hours Total factory overhead costs $314,210 $364,580 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 65,700-hour level of activity as follows: Indirect materials (variable) Maintenance (mixed) Total factory overhead costs $ 118,260 133,000 62,950 Rent (fixeciterials (variable) $314,210 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required 1. Estimate how much of the $364,580 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 $364,580 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.) intenance cost at high level of a
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