oo VIVA LTE 8:46 PM HW Chapter 2 Sawaya Co., Ltd., of Japan is a manufacturing c

Question

oo VIVA LTE 8:46 PM HW Chapter 2 Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: of Direct labor-hours Total factory overhead costs 1,000 68000 275.200 $316,000 The factory overhead costs above consist of indirect materials rent, and maintenance. The company has analyzed these costs at the 51,000-hour level of activity as follows Indirect materials (variable) Rent (fxed) Maintenance (mixed $ 96,900 125,000 53,300 Total factory overhead costs 275,200 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements Required Estimate how much of the $316,000 factory overhead cost at the high level of activity consists of maintenance cost. (Hint To do this, it may be helpful to first determine how much of the $316,000 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.) cost at high level of

Explanation / Answer

Maintenance cost at high level of activity = 316000-(96900/51000*68000)-125000= $61800

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