Nova Company's total overhead cost at various levels of activity are presented below: Total Overhead Cost...

 

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Nova Company's total overhead cost at various levels of activity are presented below: Total Overhead Cost $ 170,280 $ 148,680 $191,880 $ 213,480 Month April May June July Machine-Hours 53,000 43,000 63,000 73,000 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 43,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 47,300 43,000 58.380 $ 148,680 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $213.480 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $213,480 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 to be incurred at an activity level of 48,000 machine-hours? Nova Company's total overhead cost at various levels of activity are presented below: Total Overhead Cost $ 170,280 $ 148,680 $191,880 $ 213,480 Month April May June July Machine-Hours 53,000 43,000 63,000 73,000 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 43,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 47,300 43,000 58.380 $ 148,680 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $213.480 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $213,480 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 to be incurred at an activity level of 48,000 machine-hours?

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1 Total overhead cost 213480 Less Utilities 80300 47300... View the full answer