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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: The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 50,000-hour level of activity as follows: To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements. Estimate how much of the $17,625,000 factory overhead cost at the high level of activity consists of maintenance cost. Using the high-low method, estimate a cost formula for maintenance. What total factory overhead costs would you expect the company to incur at an operating level of 70,000 direct labor-hours
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