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Echeverria S.A. is an Argentinian 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 (in Argentinian pesos) at high and low levels of activity over recent years are given below Level of Activity Low 72,700 High 82700 Machine-hours Total factory overhead 339,641 pesos 362,941 pesos costs The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 72,700 machine-hours level of activity as follows: Indirect materials (variable) Rent (fixed) Maintenance (mixed) 129,406 pesos 132,000 78,235 Total factory overhead 339,641 pesos costs 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 362,941 pesos at the high level of activity consists of maintenance cost. (Hint First determine how much of the 362,941 pesos cost consists of indirect materials and rent. Think about the behaviour of variable and fixed costs.) (Do not round intermediate calculations.) Maintenance cost 510,147 pesos 2. Using the high-low method, estimate a cost formula for maintenance. (Round variable cost to 2 decimal place and fixed cost to the nearest dollar amount.) pesos + peso X 3. What total overhead costs would you expect the company to incur at an operating level of 77700 machine-hours? (Do not round intermediate calculations.) Total factory overhead costs pesos

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