Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to thenumber of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are givenbelow:Machine-hoursTotal factory overhead costsIndirect materials (variable)Rent (fixed)Maintenance (mixed)Total factory overhead costsThe factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the60,500 machine-hours level of activity as follows:Maintenance cost$ 8,561,500Y=Level of ActivityLowFor planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements.Required:1. Estimate how much of the factory overhead cost of $38,139,000 at the high level of activity consists of maintenance cost.60,500$34,179,000XTotal factory overhead costsHigh80,500$38, 139,000$ 9,377,50017,100,0007,701,500$34,179,0002. Using the high-low method, estimate a cost formula for maintenance.3. What total overhead costs would you expect the company to incur at an operating level of 65,500 machine-hours?

The costs incurred for the production are classified as fixed and variable costs. The high low…

Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 60,500 machine-hours level of activity as follows: Maintenance cost Level of Activity Low 60,500 $34,179,000 For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $38,139,000 at the high level of activity consists of maintenance cost. $ 8,561,500 Y= High 80,500 $38,139,000 $ 9,377,500 17,100,000 7,701,500 $34,179,000 X 2. Using the high-low method, estimate a cost formula for maintenance. 3. What total overhead costs would you expect the company to incur at an operating level of 65,500 machine-hours?

Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 60,500 machine-hours level of activity as follows: Maintenance cost Level of Activity Low 60,500 $34,179,000 For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $38,139,000 at the high level of activity consists of maintenance cost. $ 8,561,500 Y= High 80,500 $38,139,000 $ 9,377,500 17,100,000 7,701,500 $34,179,000 X 2. Using the high-low method, estimate a cost formula for maintenance. 3. What total overhead costs would you expect the company to incur at an operating level of 65,500 machine-hours?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 62,200 machine-hours level of activity as follows: Level of Activity Low 62,200 $36, 159, 600 Maintenance cost For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $40,519,600 at the high level of activity consists of maintenance cost. Y = + High 82, 200 $40,519,600 $ 22,600,000 $ 9,019,000 18,100,000 9,040,600 $36, 159, 600 2.…
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