Question

Nova Company’s total overheadcost at various levels of activity are presented below:

Month	Machine-Hours	Total OverheadCost
April	48,000	$200,760
May	38,000	$176,560
June	58,000	$224,960
July	68,000	$249,160

Assume that the total overhead cost above consists of utilities,supervisory salaries, and maintenance. The breakdown of these costsat the 38,000 machine-hour level of activity is:

Utilities(variable)	$	45,600
Supervisory salaries(fixed)		68,000
Maintenance(mixed)		62,960
Total overheadcost	$	176,560

Nova Company’s management wants to break down the maintenancecost into its variable and fixed cost elements.

Required:

1.	Estimate how much of the $249,160 of overhead cost in July wasmaintenance cost. (Hint: To do this, it may be helpful tofirst determine how much of the $249,160 consisted of utilities andsupervisory salaries. Think about the behavior of variable andfixed costs!) (Do not round intermediatecalculations.)

2.	Using the high-low method, estimate a cost formula formaintenance. (Do not round your intermediate calculations.Round the "Variable cost per unit" to 2 decimalplaces.)

3.	Express the company’s total overhead cost in the linearequation form Y = a + bX. (Do not round yourintermediate calculations. Round the "Variable cost per unit" to 2decimal places.)

4.	What total overhead cost would you expect to beincurred at an activity level of 43,000 machine-hours? (Donot round intermediate calculations.)