Help me please. Assume that the total overhead cost above consists of utilities,

Question

Help me please.

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

Nova Company’s management wants to break down the maintenance cost into its variable and fixed cost elements.

Nova Company’s total overhead cost at various levels of activity are presented below: 1. Estimate how much of the $246,000 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $246,000 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.) Maintenance cost in July 2. Using the high-low method, estimate a cost formula for maintenance. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.) MachineMaintenance Hours Cost High activity level Low activity level Change 0 $ Variable cost element per MH Fixed cost element

Explanation / Answer

Details At 60000 Machine hours At 90000 Machine hours Remark Utilities (variable) 48,000 72000 48000*90000/60000   Supervisory salaries (fixed) 21,000 21,000 Fixed   Maintenance (mixed) 105,000 1,53,000 Balancing Figure   Total overhead cost 174,000 246000 Details Machine Hours Maintenance Cost Low Activity Level                  60,000.00       1,05,000.00 High Activity Level                  90,000.00       1,53,000.00 Change                  30,000.00           48,000.00 Variable Cost Element 48000/30000 1.6 Per MH Fixed Cost Element 153000-90000*1.6             9,000.00

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.