Reference no: EM131921340
Problem - Golden Company's total overhead cost at various levels of activity are presented below:
Month Machine-Hours Total Overhead Cost
March 51,000 $190,960
April 41,000 $166,360
May 61,000 $215,560
June 71,000 $240,160
Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 41,000 machine-hour level of activity is as follows:
Utilities (variable) $ 57,400
Supervisory salaries (fixed) 46,000
Maintenance (mixed) 62,960
Total overhead cost $ 166,360
The company wants to break down the maintenance cost into its variable and fixed cost elements.
Required:
1. Estimate how much of the $240,160 of overhead cost in June was maintenance cost.
2. Using the high-low method, estimate a cost formula for maintenance.
3. Express the company's total overhead cost in the form Y = a + bX.
4. What total overhead cost would you expect to be incurred at an activity level of 46,000 machine-hours?