Question: Could you please help me to solve this question? Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to

Could you please help me to solve this question?


Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Level of Activity Low High Machine-hours 85,000 105,000 Total factory overhead costs $42,085,000 $47,005,000 The factory overhead costs above consist of indirect materials, rent. and maintenance. The company has analyzed these costs at the 85,000 machine-hours level of activity as follows: Indirect materials (variable) $15,215,000 Rent (fixed) 17,000,000 Maintenance (mixed) 9,870,000 Total factory overhead costs $42,085,000 For planning purposes, the company wants to break down the maintenance cost into its variable and xed cost elements. Required: 1. Estimate how much of the factory overhead cost of $47,005,000 at the high level of activity consists of maintenance cost. :I 2. Using the highlow method, estimate a cost formula for maintenance. -:-:- 3. What total overhead costs would you expect the company to incur at an operating level of 90.000 machine-hours? :|
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