Prince Company’s total overhead costs at various levels of activity are presented below:
Assume that the overhead cost above consists of utilities, supervisory salaries, depreciation, and maintenance. The breakdown of these costs at the 80,000-machine-hour level of activity in October is as follows:
The company wants to break down the maintenance cost into its variable and fixed cost elements.
1. Estimate how much of the $483,200 of overhead cost in December was maintenance cost.
2. Using the high–low method, estimate a cost formula for maintenance.
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 90,000 machine-hours?

  • CreatedJuly 08, 2015
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