EnviroSpecialists is an environmental engineering company that provides assessments of the effect of new construction and proposed development on the surrounding landscape. Customers include large private developers as well as municipalities and the provincial and federal governments. Total overhead costs fluctuate somewhat from year to year according to the number of contracted $($billable$)$ hours worked by employees each year. These costs at high and low levels of activity over recent years are given below:

Low activity High activity

Total billable hours $17,00025,000$

Total overhead cost $308,530352,450$

The total overhead costs above consist of office supplies, rent, and vehicle costs. Some vehicles used by the employees to complete their work are on long$-$term leases, while the majority are rented on a short$-$term basis as needed. The company has analyzed overhead costs at the $17,000$ billable$-$hours level of activity as follows:

Office supplies $($variable$)18,530$

Rent $($fixed$)175,000$

Vehicle costs $($mixed$)115,000$

Total overhead costs $308,530$

$1.$ Estimate how much of the overhead cost of $$352,450$ at the high level of activity consists of vehicle costs. Note: Round the "Variable cost per unit" to $2$ decimal places.

$2.$ Using the high$$low method, estimate a cost formula for vehicle costs. Note: Round "Billable hour$($s$)"$ answer to $2$ decimal places.

$3.$ What total overhead costs would you expect the company to incur at an operating level of $35,000$ billable hours?

Answer rating: 100% (QA)

1 Estimate how much of the overhead cost of 352450 at the high level of activity consists of vehicle costs To estimate the portion of the overhead cos... View the full answer