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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 Level of Activity Low 72,700 $33,964, 100 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 72,700 machine-hours level of activity as follows: High 82,700 $36,294, 100 Maintenance cost $12,940,600 13,200,000 7,823,500 $33,964, 100 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 $36,294,100 at the high level of activity consists of maintenance cost.

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 Level of Activity Low 72,700 $33,964, 100 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 72,700 machine-hours level of activity as follows: High 82,700 $36,294, 100 Maintenance cost $12,940,600 13,200,000 7,823,500 $33,964, 100 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 $36,294,100 at the high level of activity consists of maintenance cost.

FINANCIAL ACCOUNTING
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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am. 106.

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 Level of Activity Low 72,700 $33,964, 100 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 72,700 machine-hours level of activity as follows: High 82,700 $36, 294, 100 Maintenance cost $12,940, 600 13,200,000 7,823,500 $33,964, 100 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 $36,294,100 at the high level of activity consists of maintenance cost.
Transcribed Image Text: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 Level of Activity Low 72,700 $33,964, 100 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 72,700 machine-hours level of activity as follows: High 82,700 $36, 294, 100 Maintenance cost $12,940, 600 13,200,000 7,823,500 $33,964, 100 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 $36,294,100 at the high level of activity consists of maintenance cost.
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