CHAPTER 6 ASSIGNMENT i Saved Help Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. 2 Sawaya Co., Ltd., of Japan, is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labour-hours worked in the factory. Total factory overhead costs (in Japanese yen, denoted *) at high and low levels of activity for recent years are provided below: 10 points Level of Activity Low High Direct labour-hours 100, 060 150, 000 Total factory overhead costs *12, 450, 000 *15, 275, 000 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 100,000-hour level of activity as follows: Indirect materials (V) 4, 200,000 Rent (F) 5,500,000 Maintenance (M) 2, 750, 000 Total factory overhead costs *12, 450, 000 V = variable; F = fixed; M = mixed. To have data available for planning, the company wants to break the maintenance cost down into its variable and fixed cost elements. Required: 1. Estimate how much of the 15,275,000 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the *15,275,000 consists of indirect materials and rent. Think about the behaviour of variable and fixed costs!) x Answer is complete but not entirely correct. Maintenance cost * 2,427,885 x