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 61,000 machine-hours level of activity as follows: Maintenance cost Level of Activity Low 61,000 $30,491,000 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 $34,611,000 at the high level of activity consists of maintenance cost. Y = High 81,000 $34,611,000 $ 8,540,000 14,800,000 7,151,000 $30,491,000 2. Using the high-low method, estimate a cost formula for maintenance. X Total factory overhead costs 3. What total overhead costs would you expect the company to incur at an operating level of 66,000 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 61,000 machine-hours level of activity as follows: Maintenance cost Level of Activity Low 61,000 $30,491,000 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 $34,611,000 at the high level of activity consists of maintenance cost. Y = High 81,000 $34,611,000 $ 8,540,000 14,800,000 7,151,000 $30,491,000 2. Using the high-low method, estimate a cost formula for maintenance. X Total factory overhead costs 3. What total overhead costs would you expect the company to incur at an operating level of 66,000 machine-hours?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

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am. 106.
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