Nova Company's total overhead cost at various levels of activity are presented below: Month April...
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Nova Company's total overhead cost at various levels of activity are presented below: Month April May June July Machine- Hours 47,000 37,000 57,000 67,000 Total Overhead Cost $ 180, 900 $154,900 $206,900 $ 232,900 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 37,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 51,800 46,000 57,100 $154,900 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $232,900 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $232,900 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.) 2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a +bX. 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 42,000 machine-hours
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