Problem 5A-8 (Algo) High-Low Method; Predicting Cost [LO5-10] Nova Company's total overhead cost at various levels...
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Problem 5A-8 (Algo) High-Low Method; Predicting Cost [LO5-10] Nova Company's total overhead cost at various levels of activity are presented below: Total Overhead Cost $ 170,500 $ 148,000 Month April May June July Machine-Hours 46,000 36,000 56,000 66,000 Assume the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 36,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 193,090 $ 215,500 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required 1 Required: 1. Estimate how much of the $215,500 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $215,500 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 at an activity level of 41,000 machine-hours? Complete this question by entering your answers in the tabs below. Required 2 $ 39,600 54,000 54,400 $ 148,000 Maintenance cost in July Required 3 Required 4 Estimate how much of the $215,500 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $215,500 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) Note: Do not round your intermediate calculations. Required 1 Required 2 > Problem 5A-8 (Algo) High-Low Method; Predicting Cost [LO5-10] Nova Company's total overhead cost at various levels of activity are presented below: Total Overhead Cost $ 170,500 $ 148,000 Month April May June July Machine-Hours 46,000 36,000 56,000 66,000 Assume the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 36,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 193,090 $ 215,500 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required 1 Required: 1. Estimate how much of the $215,500 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $215,500 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 at an activity level of 41,000 machine-hours? Complete this question by entering your answers in the tabs below. Required 2 $ 39,600 54,000 54,400 $ 148,000 Maintenance cost in July Required 3 Required 4 Estimate how much of the $215,500 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $215,500 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) Note: Do not round your intermediate calculations. Required 1 Required 2 >
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To estimate how much of the 215500 of overhead cost in July was maintenance cost we first need to determine the portion of the cost that consists of utilities and supervisory salaries Since utilities ... View the full answer
Related Book For
Managerial Accounting
ISBN: 9781259275814
11th Canadian Edition
Authors: Ray H Garrison, Alan Webb, Theresa Libby
Posted Date:
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