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Homework answers / question archive / Crosshill Company's total overhead costs at various levels of activity are presented below:   MonthMachine-HoursTotal Overhead Cost     April49,000  $202,290       May 39,000  $178,190       June59,000  $226,390       July69,000  $250,490     Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance

Crosshill Company's total overhead costs at various levels of activity are presented below:   MonthMachine-HoursTotal Overhead Cost     April49,000  $202,290       May 39,000  $178,190       June59,000  $226,390       July69,000  $250,490     Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance

Accounting

Crosshill Company's total overhead costs at various levels of activity are presented below:

 

MonthMachine-HoursTotal Overhead Cost     April49,000  $202,290       May 39,000  $178,190       June59,000  $226,390       July69,000  $250,490  

 

Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 39,000-machine-hour level of activity in May is as follows:

 

     Utilities (variable) $46,800    Supervisory salaries (fixed) 69,000   Maintenance (mixed) 62,390    Total overhead cost $178,190  

 

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

 

Required:

1. Estimate how much of the $250,490 of overhead cost in July was maintenance cost. (Hint: first determine how much of the $250,490 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.) (Do not round intermediate calculations.)

 

 

 

 

 

2. Using the high-low method, estimate a cost formula for maintenance. (Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.)

  machine hours machine cost

high activity level ............... .............

low activity level ................. ..............

change ............... ........................

 

 

variable cost element .................. .............

fixed cost element .................. ...............

 

y=........+.....x

 

 

 

3. Express the company's total overhead cost in the form 

Y = a + bX(Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.)

 

variable cost per

machine hour fixed cost

utilities cost ........... ..............

supervisory salaries cost ............. ..............

maintenance cost ............. ...............

total overhead cost ............ ..............

 

y=....+....x

 

 

4. What total overhead cost would you expect to be incurred at an activity level of 44,000 machine-hours? 

(Do not round intermediate calculations.)

 

 

 

total overhead cost...........................

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