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 ofactivity over recent years are given below:Machine-hoursTotal factoryoverhead costsIndirect materials(variable)Rent (fixed)Maintenance (mixed)Total factory overheadcostsThe factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzedthese costs at the 62,200 machine-hours level of activity as follows:Level of ActivityLow62,200$36, 159, 600MaintenancecostFor planning purposes, the company wants to break down the maintenance cost into its variable and fixed costelements.Required:1. Estimate how much of the factory overhead cost of $40,519,600 at the high level of activity consists of maintenancecost.Y =+High82, 200$40,519,600$22,600,000$ 9,019,00018,100,0009,040,600$36, 159, 6002. Using the high-low method, estimate a cost formula for maintenance.X3. What total overhead costs would you expect the company to incur at an operating level of 67,200 machine-hours?Total factory overheadcosts

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 Level of Activity Low 62,200 $36, 159, 600 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: High 82, 200 $40,519,600 Maintenance $ 9,019,000 18,100,000 9,040, 600 $36,159,600 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.

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 Level of Activity Low 62,200 $36, 159, 600 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: High 82, 200 $40,519,600 Maintenance $ 9,019,000 18,100,000 9,040, 600 $36,159,600 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.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...

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