5-17 prospero corporations total overhead costs at various levels of activity ar

Question

5-17 prospero corporations total overhead costs at various levels of activity are presented below:
I need help with 1-4 , with explanation thanks! total actory overhead costs would you expect the company to incur at an operating level of L, estimate a cost formula for maintenance lHable and fixed costs!) 3. What 4.800 directlabor-hours? 7 High-Low Analysis and Predicting Cost (LOI, LO3) PROBLEM 5-17 Prospero Corporation's ion's total overhead costs at various levels of activity are presented below: CHECK FIGURE (2) $47,500 per month plus $1.50 per machine-hour Machine. Hours Total Overhead Costs Month September.?.. October 20,000 November $99,500 $119.000 $138,500 15,000 5.00 $80.000 Assume that the total overhead costs above consist of utilities, supervisory saleries, and msinienauce. The breakdown of these costs at the 5,000 machine-hour level of activity is $12,000 Supervisory salaries (F)...13,000 Maintenance (M).. . 55,000 v variable: F fixed: M mixed. Prospero Corporation's management wants to break down the maintenance cost into its basic variable and fixed cost elements. Required I. As shown above, overhead costs in October amounted to S138,500. Determine how much of thi consisted of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of

Explanation / Answer

1)Utilities :variable cost per MH =12000 /5000 = $ 2.4 per MH

Maintenance cost =Total overhead- utilities- supervisory salaries

       = 138500- (2.4*20000MH) - 13000

         = 138500- 48000 -13000

         = 77500

**At 138500 ,20000MH is worked

2)At lowest activity of 5000 MH,maintenace cost = 80000- [5000*2.4]-13000 = 55000

Variable cost per MH =change in cost /change in MH

             = [77500-55000]/[20000-5000]

            = 22500/15000

           = $ 1.5 per MH

Fixed cost at highest activity = total cost- variable cost

         = 77500- [20000*1.5]= 47500

Y= 47500+1.5x

3)Total fixed cost = 47500+13000= 60500

variable cost per MH =1.5+2.4 = $ 3.9 per MH

Y = 60500+ 3.9X

4)Total overhead = 60500 + [3.9* 17000]

            60500+ 66300

             126800

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