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Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Level of Activity High 61,000 81,000 Total factory overhead costs $30,491,000 $34,611,000 Low Machine-hours The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 61,000 machine-hours level of activity as follows: Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs $8,540,000 14,800,000 7,151,000 $30,491,000 For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $34,611,000 at the high level of activity consists of maintenance cost. Mitrine cost 2. Using the high-low method, estimate a cost formula for maintenance. 3. What total overhead costs would you expect the company to incur at an operating level of 66,000 machine-hours? To actory overcados
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