What total overhead cost would you expect to be incurred at

Reference no: EM13580858

Golden Company's total overhead cost at various levels of activity are presented below:

Month	Machine-Hours	Total Overhead Cost
March	54,000	$218,820
April	44,000	$192,520
May	64,000	$245,120
June	74,000	$271,420

Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 44,000 machine-hour level of activity is as follows:


Utilities (variable)	$	66,000
Supervisory salaries (fixed)		62,000
Maintenance (mixed)		64,520

Total overhead cost	$	192,520

The company wants to break down the maintenance cost into its variable and fixed cost elements.

Required:

Estimate how much of the $271,420 of overhead cost in June was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $271,420 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs within the relevant range.) (Do not round intermediate calculations.)

Maintenance cost in June

2.	Using the high-low method, estimate a cost formula for maintenance. (Round the "Variable cost per unit" to 2 decimal places.)

3.	Express the company's total overhead cost in the form Y = a + bX. (Round the "Variable cost per unit" to 2 decimal places.)

4.	What total overhead cost would you expect to be incurred at an activity level of 49,000 machine-hours?(Do not round intermediate calculations.)

Total overhead cost

Reference no: EM13580858

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