andrewkwak Posts: 1, Reputation: 1 New Member #1 Feb 3, 2013, 05:31 PM
Golden Company’s total overhead cost at various levels of activity are presented belo
March 51,000 \$210,620
April 41,000 \$184,420
May 61,000 \$236,820
June 71,000 \$263,020

Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 41,000 machine-hour level of activity is as follows:

Utilities (variable) \$ 61,500
Supervisory salaries (fixed) 63,000
Maintenance (mixed) 59,920

The company wants to break down the maintenance cost into its variable and fixed cost elements.

Required:
1.
Estimate how much of the \$263,020 of overhead cost in June was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the \$263,020 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs within the relevant range.) (Do not round intermediate calculations. Omit the "\$" sign in your response.)

Maintenance cost in June \$_________________

2.
Using the high-low method, estimate a cost formula for maintenance. (Round the "Variable cost per unit" to 2 decimal places and "Fixed cost" to the nearest dollar amount. Omit the "\$" sign in your response.)

Y = \$_____ + \$_____X

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