Sawaya Co., Ltd., of Japan, is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labour-hours worked in the factory. Total factory overhead costs (in Japanese yen, denoted * at high and low levels of activity for recent years are provided below:

Direct labour-hours

Total factory overhead costs

Level of Activity

Low.

High

180,000

12,533,000

230,000

14,217,000

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The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the

180.000-hour level of activity as follows

Indirect materials (V)

Rent (F)

Maintenance (M)

Total factory overhead costs

5,220,000

5,014,000

2,299,000

12,535,000

V = variable F = fixed; M = mixed

To have data available for planning, the company wants to break the maintenance cost down into its variable and fixed cost elements.

Estimate how much of the 14,217,000 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the 14,217,000 consists of indirect materials and rent. Think about the behaviour of variable and fixed costs!)

Maintenance, cost

nces.

2. By means of the high-low method of cost analysis, estimate a cost formula for maintenance. (Round the "Variable cost" to 2

Y = + -x

3. What total factory overhead costs would you expect the company to incur at an operating level of 84,000 direct labour-hours? (Do not round intermediate calculations.)

Total factory overhead costs

Sawaya Co., Ltd, of Japan, is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labour-hours worked in the factory. Total factory overhead costs fin Japanese yen, denoted n ) at high and low levels of activity for recent vears are provided below The factory ovethead costs above consist of indirect materials, rent, and maintenance. The compary has anailped these costs at the 180.000-hour level of octivity as follow: Required: Required: 1. Estimate how much of the 14,217,000 factory overhead cost at the high level of activity consists of maintenance cost. (Hint To do this, it may be helpful to first determine how much of the Y14,217,000 consists of indirect materials and rent. Think about the behaviour of variable and fixed costs!) 2. By means of the highlow method of cost analysis, estimate a cost formula for maintenance. (Round the "Variable coser to 2 decimel places.) 3. What total factory overhead costs would you expect the company to incur at an operating level of 84,000 direct labour-hours? (Do not round intermediote calculations.)