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 Activity
	Low				High
Direct labor-hours		72,600			96,800
Total factory overhead costs	$	277,520		$	318,660

The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 72,600-hour level of activity as follows:

Indirect materials (variable)	$	94,380
Rent (fixed)		128,000
Maintenance (mixed)		55,140
Total factory overhead costs	$	277,520

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 $318,660 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 $318,660 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.)

2. Using the high-low method, estimate a cost formula for maintenance. (Round the Variable cost per DLH to 2 decimal places.)

3. What total factory overhead costs would you expect the company to incur at an operating level of 79,860 direct labor-hours? (Do not round intermediate calculations.)