Nova Company's total overhead cost at various levels of activity are presented below: Month April May...
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Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine- Hours Total Overhead Cost 53,000 $ 216,200 43,000 63,000 73,000 $ 190,200 $ 242,200 $ 268,200 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 $ 64,500 61,000 64,700 $ 190,200 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 $268,200 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $268,200 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Estimate how much of the $268,200 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $268,200 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) (Do not round intermediate calculations.) Maintenance cost in July < Required 1 Required 2 > Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine- Hours Total Overhead Cost 53,000 $ 216,200 43,000 63,000 73,000 $ 190,200 $ 242,200 $ 268,200 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 $ 64,500 61,000 64,700 $ 190,200 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 $268,200 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $268,200 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Estimate how much of the $268,200 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $268,200 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) (Do not round intermediate calculations.) Maintenance cost in July < Required 1 Required 2 >
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Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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