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Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine-Hours 48,000 38,000 58,000 68,000 Total Overhead

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Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine-Hours 48,000 38,000 58,000 68,000 Total Overhead Cost $ 186,840 $ 161, 040 $ 212,640 $ 238,440 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 38,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 57,000 46,000 58,040 $ 161,040 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $238,440 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $238,440 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) 2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bx 3. Express the company's total overhead cost in the form Y = a + bx. 4. What total overhead cost would you expect to be incurred at an activity level of 43,000 machine-hours? Required 1 Required 2 Required 3 Required 4 Estimate how much of the $238,440 of overhead cost in July was maintenance cost. (Hint: determine how much of the $238,440 consisted of utilities and supervisory salaries. Think fixed costs.) (Do not round intermediate calculations.) Maintenance cost in July Required 1 Required 2 Required 3 Required 4 Using the high-low method, estimate a cost formula for maintenance in the form Y = a + b calculations. Round the "Variable cost per unit" to 2 decimal places.) ? Express the company's total overhead cost in the form Y = a + bx. (Do not round your inte "Variable cost per unit" to 2 decimal places.) Variable Cost per Machine- Fixed Cost Hour Utilities cost Supervisory salaries cost Maintenance cost Total overhead cost Y= ? What total overhead cost would you expect to be incurred at an activity level of 43,000 intermediate calculations.) Total overhead cost

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