Question: HighLow Method; Predicting Cost [FEr L01. H; [.02] Colby Limited is a manufacturing company whose total Factory overhead costs uctuate somewhat from year to year.

HighLow Method; Predicting Cost [FEr L01. H; [.02] Colby Limited is a manufacturing company whose total Factory overhead costs uctuate somewhat from year to year. according to the number of machinehours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machinehou rs 50.000 "(5,000 Total factor}? overhead costs $14,250.000 S |i",625,000 The factory overhead costs above consist of indirect materials. rent. and maintenance. The company has analyzed these costs at the 50.000 machine-hours level of activity as follows: Indirect materials (variable) 36 5.000.000 Rent (xed) 5.000.000 Maintenance (mixed) 3.250.000 Total factory overhead costs $14,250,000 For planning purposes. the company wants to break down the maintenance cost into its variable and xed cost elements. Required: I. Estimate how much ofthe factory overhead cost ofS 172625.000 at the high level of activity consists of maintenance cost. 2. Using the highlow method. estimate a cost formula for maintenance. 3. What tam} overhead costs would you expect the company to incur at an operating level of "(0.000 machine-hours

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