Reference no: EM131778009

Question - Nova Company's total overhead costs at various levels of activity are presented below:

Month Machine Hours Total Overhead Costs

April 70,000 $198,000

May 60,000 $174,000

June 80,000 $222,000

July 90,000 $246,000

Assume that the total overhead costs above consist of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 60,000 machine-hour level of activity is:

Utilities (variable) $48,000

Supervisory salaries (fixed) 21,000

Maintenance (mixed) 105,000

Total overhead costs $174,000

Required:

1. Estimate how much of the $246,000 of overhead cost in July was maintenance cost?

2. Using the high-low method, estimate a cost formula for maintenance

3. Express the company's total overhead costs in the linear equation form Y = a + bX.

4. What total overhead costs would you expect to be incurred at an operating level of 75,000 machine hours?