PROBLEM 3-17 High-Low Method; Predicting Cost (LOI, L03) Nova Company's total overhead cost at various levels of activity are presented below: Machine Hours Total Overhead Cost Month April May June July 70,000 60,000 80,000 90,000 $198.000 $174,000 $222,000 $246,000 Assume that the total overhead cost above consists of utilities, supervisory salaries, and mainte- mance. The breakdown of these costs at the 60,000 machine-hour level of activity is: Chapter 3 $ 48,000 21,000 105,000 Utilities (variable) Supervisory salaries (fixed). Maintenance (mixed) Total overhead cost $174.000 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 S246,000 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $246,000 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, 3. Express the company's total overhead cost in the linear equation form Y = a + bx. 4. What total overhead cost would you expect to be incurred at an operating activity level of 75.000 machine-hours