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 49,000 $ 203,540 39,000 $ 177,940 59,000 $ 229,140 69,000 $ 254,740 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 39,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 58,500 66,000 53,440 $ 177,940 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 $254,740 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $254,740 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 44,000 machine-hours? Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine- Hours Total Overhead Cost 49,000 $ 203,540 39,000 $ 177,940 59,000 $ 229,140 69,000 $ 254,740 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 39,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 58,500 66,000 53,440 $ 177,940 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 $254,740 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $254,740 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 44,000 machine-hours?