Problem 1-20A High-Low Method; Predicting Cost [LO1-4, LO1-5]

Nova Companys total overhead cost at various levels of activity are presented below:

Month	Machine-Hours	Total Overhead Cost
April	48,000	$212,620
May	38,000	$184,220
June	58,000	$241,020
July	68,000	$269,420

Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 38,000 machine-hour level of activity is:

Utilities (variable)	$	60,800
Supervisory salaries (fixed)		62,000
Maintenance (mixed)		61,420
Total overhead cost	$	184,220

Nova Companys management wants to break down the maintenance cost into its variable and fixed cost elements

Problem -120A High-Low Method, Predicting Cost [L01-4, LO-15] Nova Company's total overhead cost at various levels of activity are presented below: Month Machine-Hours Total Overhead Cost 48,000 $212,620 April $184,220 May 38,000 58,000 $241,020 June 68,000 July $269,420 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 38,000 machine-hour level of activity is: 60,800 Utilities (variable) 62,000 Supervisory salaries (fixed) 61,420 Maintenance (mixed) 184,220 Total overhead cost 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 $269,420 of overhead cost in July was maintenance cost. (Hint To do this, it may be helpful to first determine how much of the $269,420 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) (Do notround intermediate calculations Maintenance cost in July