Nova Companyâs total overhead cost at various levels of activity are presented below: Month Machine-Hours Total Overhead Cost April 47,000 $211,050 May 37,000 $182,550 June 57,000 $239,550 July 67,000 $268,050 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 37,000 machine-hour level of activity is: Utilities (variable) $ 59,200 Supervisory salaries (fixed) 63,000 Maintenance (mixed) 60,350 Total overhead cost $ 182,550 Nova Companyâs management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $268,050 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $268,050 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!)
Nova Companyâs total overhead cost at various levels of activity are presented below: Month Machine-Hours Total Overhead Cost April 47,000 $211,050 May 37,000 $182,550 June 57,000 $239,550 July 67,000 $268,050 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 37,000 machine-hour level of activity is: Utilities (variable) $ 59,200 Supervisory salaries (fixed) 63,000 Maintenance (mixed) 60,350 Total overhead cost $ 182,550 Nova Companyâs management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $268,050 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $268,050 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!)
Related questions
| Nova Companyâs 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 Companyâs 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 companyâs 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.) |
