Nova Company’s total overhead cost at various levels of activity are presented below: Month Machine- Hours Total Overhead Cost April 50,000 $ 190,900 May 40,000 $ 164,400 June 60,000 $ 217,400 July 70,000 $ 243,900 Assume that the total...

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Accounting

Nova Company’s total overhead cost at various levels of activityare presented below:
Month Machine-
Hours Total
Overhead
Cost
April 50,000 $ 190,900
May 40,000 $ 164,400
June 60,000 $ 217,400
July 70,000 $ 243,900
Assume that the total overhead cost above consists of utilities,supervisory salaries, and maintenance. The breakdown of these costsat the 40,000 machine-hour level of activity is:
Utilities (variable) $ 60,000
Supervisory salaries(fixed) 41,000
Maintenance (mixed) 63,400
Total overhead cost $ 164,400
Nova Company’s management wants to break down the maintenancecost into its variable and fixed cost elements.
Required:
1. Estimate how much of the $243,900 of overhead cost in Julywas maintenance cost. (Hint: to do this, it may be helpfulto first determine how much of the $243,900 consisted of utilitiesand supervisory salaries. Think about the behavior of variable andfixed costs.)
2. Using the high-low method, estimate a cost formula formaintenance in the form Y = a + bX.
3. Express the company’s total overhead cost in theform Y = a + bX.
4. What total overhead cost would you expect to beincurred at an activity level of 45,000 machine-hours?

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maintainance cost at july machine hour 70000 particulars 70000 Mhr Total overhead cost 24390000 less utilites cost 15per hour 70000150 10500000 supervisor salaries 4100000 maintainance cost 9790000 Utilities cost per hour See Answer

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Nova Company’s total overhead cost at various levels of activityare presented below:MonthMachine-HoursTotalOverheadCostApril50,000$190,900May40,000$164,400June60,000$217,400July70,000$243,900Assume that the total overhead cost above consists of utilities,supervisory salaries, and maintenance. The breakdown of these costsat the 40,000 machine-hour level of activity is:Utilities (variable)$60,000Supervisory salaries(fixed)41,000Maintenance (mixed)63,400Total overhead cost$164,400Nova Company’s management wants to break down the maintenancecost into its variable and fixed cost elements.Required:1. Estimate how much of the $243,900 of overhead cost in Julywas maintenance cost. (Hint: to do this, it may be helpfulto first determine how much of the $243,900 consisted of utilitiesand supervisory salaries. Think about the behavior of variable andfixed costs.)2. Using the high-low method, estimate a cost formula formaintenance in the form Y = a + bX.3. Express the company’s total overhead cost in theform Y = a + bX.4. What total overhead cost would you expect to beincurred at an activity level of 45,000 machine-hours?

Month	Machine- Hours		Total Overhead Cost
April		50,000	$	190,900
May		40,000	$	164,400
June		60,000	$	217,400
July		70,000	$	243,900


Utilities (variable)	$	60,000
Supervisory salaries(fixed)		41,000
Maintenance (mixed)		63,400
Total overhead cost	$	164,400