Problem 5A-8 (Algo) High-Low Method; Predicting Cost [LO5-10) Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine- Hours 45,000 35,000 55,000 65,000 Total Overhead Cost $ 172,450 $ 149,550 $ 195, 350 $ 218,250 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 35,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 38,500 57,000 54,050 $149,550 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 $218,250 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $218,250 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 40,000 machine-hours? Required 1 Required 2 Required 3 Required 4 Estimate how much of the $218,250 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $218,250 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 Required 3 Required 4 Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bX. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) Y= Required 1 Required 2 Required 3 Required 4 Express the company's total overhead cost in the form Y = a + bX. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) Variable Cost per Machine- Hour Fixed Cost Utilities cost Supervisory salaries cost Maintenance cost Total overhead cost $ 0.00 $ 0 Y= Required 1 Required 2 Required 3 Required 4 What total overhead cost would you expect to be incurred at an activity level of 40,000 machine-hours? (Do not round intermediate calculations.) Total overhead cost