50.1K

Verified Solution

Link Copied!

Sawaya Co, Ltd., of Japan, is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labour-hours worked in the factory. Total foctory overhead costs ih Japanese yen, denoted y) at high and low levels of activity for recent years are provided below: The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 90,000 -hour level of activity as follows; V= variable; F= fixed; M= mixed. To have data available for planning, the company wants to break the maintenance cost down into its variable and fixed cost elements. Required: 1. Estimate how much of the 15,185,000 factory overhead cost at the high level of activity consists of maintenance cost, (Hint: To da this, it may be helpful to first determine how much of the $15,185,000 consists of indirect materials and rent. Think atiout the behaviour of variable and fixed costs!) To have data avallable for planning, the company wonts to break the maintenance cost down into iss voriable andid fixed cost eliments Required: 1. Estimate how much of the 15.185,000 factory overhead cost at the high level of acivity consists of malntenance cost (Hint: To do this, it may be helpful to first determine how much of the $15,185,000 consists of indirect matentals and rent. Fink about the betiaviout of variable and fixed costst) Answer is complete but not entirely correct. 4,245,000 2. By means of the high-iow method of cost analysis, estimate a cost formula for maintenance. (Round the "Voriable cost' to 2 decimel places.) (x) Answer is complete but not entirely correct

Answer & Explanation Solved by verified expert

See Answer