Prince Companys total overhead costs at various levels of activity are presented below: Assume that the overhead
Question:
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.
Required:
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?
Step by Step Answer:
Managerial Accounting
ISBN: 978-1259024900
9th canadian edition
Authors: Ray Garrison, Theresa Libby, Alan Webb