Nova Company's total overhead cost at various levels of activity are presented below: Total Overhead Cost $216,510 $ 190,810 $ 242,210 $ 267,910 Month April May June July Machine-Hours 53,000 43,000 63,000 73,000 Assume the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 43,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 64,500 62,000 64,310 $ 190,810 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 $267,910 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $267,910 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 48,000 machine-hours?
Nova Company's total overhead cost at various levels of activity are presented below: Total Overhead Cost $216,510 $ 190,810 $ 242,210 $ 267,910 Month April May June July Machine-Hours 53,000 43,000 63,000 73,000 Assume the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 43,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 64,500 62,000 64,310 $ 190,810 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 $267,910 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $267,910 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 48,000 machine-hours?
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![Problem 5A-8 (Algo) High-Low Method; Predicting Cost [LO5-10]
Nova Company's total overhead cost at various levels of activity are presented below:
Total Overhead
Cost
$ 216,510
$ 190,810
$ 242,210
$ 267,910
Month
April
May
June
July
Machine-Hours
53,000
43,000
63,000
73,000
Assume the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the
43,000 machine-hour level of activity is:
Utilities (variable)
Supervisory salaries (fixed)
Maintenance (mixed)
Total overhead cost
Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements.
$ 64,500
62,000
64,310
$ 190,810
Required:
1. Estimate how much of the $267,910 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first
determine how much of the $267,910 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 tot overhead cost would you expect at an activity level of 48,000 machine-hours?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Required 4
Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bX.
Note: Do not round your intermediate calculations. Round the "Variable cost per machine hour" to 2 decimal places.
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Transcribed Image Text:Problem 5A-8 (Algo) High-Low Method; Predicting Cost [LO5-10]
Nova Company's total overhead cost at various levels of activity are presented below:
Total Overhead
Cost
$ 216,510
$ 190,810
$ 242,210
$ 267,910
Month
April
May
June
July
Machine-Hours
53,000
43,000
63,000
73,000
Assume the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the
43,000 machine-hour level of activity is:
Utilities (variable)
Supervisory salaries (fixed)
Maintenance (mixed)
Total overhead cost
Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements.
$ 64,500
62,000
64,310
$ 190,810
Required:
1. Estimate how much of the $267,910 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first
determine how much of the $267,910 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 tot overhead cost would you expect at an activity level of 48,000 machine-hours?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Required 4
Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bX.
Note: Do not round your intermediate calculations. Round the "Variable cost per machine hour" to 2 decimal places.
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4 of 4
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