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Crosshill Company's total overhead costs at various levels of activity are presented below: Total Machine- Overhead Month Hours Cost April May 45,000 $175,050 35,000 $151,550
Crosshill Company's total overhead costs at various levels of activity are presented below: Total Machine- Overhead Month Hours Cost April May 45,000 $175,050 35,000 $151,550 55,000$198,550 65,000 $222,050 June July Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 35,000-machine-hour level of activity in May is as follows: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) $ 42,000 55,000 54,550 Total overhead cost $ 151,550 The company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $222,050 of overhead cost in July was maintenance cost. (Hint: To do this, first determine $222,050 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.) (Do not round intermediate calculations.) Maintenance cost in July 2. Using the high-low method, estimate a cost formula for maintenance. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) Machine- Maintenance Hours Cost High activity level Low activity level Change 0 $ per MH Variable cost element Fixed cost element
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