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Golden Company’s total overhead cost at various levels of activity are presented belo
Month Machine-Hours Total Overhead Cost
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 Total overhead cost $ 184,420 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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