Nova Company's total overhead cost at various levels of activity are presented below: Total Overhead Cost $ 210,600 $184,200 $ 237,000 $ 263,400 Month April May June July Machine-Hours 50,000 40,000 60,000 70,000 Assume the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 40,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 56,000 60,000 68,200 $184,200 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $263,400 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $263,400 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) 2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bX. 3. Express the company's total overhead cost in the form Y = a +bx. 4. What total overhead cost would you expect at an activity level of 45,000 machine-hours?

Nova Company's total overhead cost at various levels of activity are presented below: Total Overhead Cost $ 210,600 $184,200 $ 237,000 $ 263,400 Month April May June July Machine-Hours 50,000 40,000 60,000 70,000 Assume the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 40,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 56,000 60,000 68,200 $184,200 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $263,400 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $263,400 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) 2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bX. 3. Express the company's total overhead cost in the form Y = a +bx. 4. What total overhead cost would you expect at an activity level of 45,000 machine-hours?

Name: Nova Company's total overhead cost at various levels of activity are
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Description: Nova Company's total overhead cost at various levels of activity are presented below:TotalOverhead Cost$ 210,600$ 184,200$ 237,000$ 263,400MonthAprilMayJuneJulyMachine-Hours50,00040,00060,00070,000Assume the total overhead cost above consists of uti

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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