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thats one question PROBLEM - High-Low Method: Predicting Cost 101, LO Colby Limited is a manufacturing company whese total factory overhead costs fluctuate somewhat from
thats one question
PROBLEM - High-Low Method: Predicting Cost 101, LO Colby Limited is a manufacturing company whese total factory overhead costs fluctuate somewhat from year to year,cording to the number of machinebours worked in its production facility. These costs at high and low levels of activity over recent years are given below Level of Activity Machine hou. Tocal factory overhead costs SOUDO $14,250,000 75.000 $17.625.000 Chapter 3 Cost Behaviour: Analysis and Use The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 50,000 machine-hours level of activity as follows: Indirect materials (variable). Rent (fixed)... Maintenance (mixed). Total factory overhead costs $ 5,000,000 6,000,000 3,250.000 $14,250,000 For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $17,625,000 at the high level of activity consists of maintenance cost. 2. Using the high-low method, estimate a cost formula for maintenance. 3. What total overhead costs would you expect the company to incur at an operating level of 70,000 machine-hours Step by Step Solution
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