The following is from a managerial accounting class.

Problem 2-17 High-Low Method; Predicting Cost [L02-4, L02-5] 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 laborhours 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 laborhours 67,800 90,400 Total factory overhead costs $282840 $328,520 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 67,800hour level of activity as follows: Indirect materials (variable) $ 94320 Rent (fixed) 136.000 Maintenance (mixed) 56.920 287,840 Total factory overhead costs $ 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 $328,520 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 $328,520 consists of indirect materials and rent. Think about the behavior of variable and xed costs!) (Do not round intermediate calculations.) 2. Using the high-low method, estimate a cost formula for maintenance. (Do not round intermediate calculations.) Variable cost element _ per DLH Fixed cost element _ 3. What total factory overhead costs would you expect the company to incur at an operating level of 74,580 direct laborhours? (Do not round intermediate calculations.)