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Assume that the overhead cost above consists of utilities

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Reference no: EM13510273

Golden Company's total overhead cost at various levels of activity are presented below:

Month Machine-Hours Total Overhead Cost
March 53,000 $206,910
April 43,000 $179,210
May 63,000 $234,610
June 73,000 $262,310


Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 43,000 machine-hour level of activity is as follows:

Utilities (variable) $ 68,800
Supervisory salaries (fixed)
46,000
Maintenance (mixed)
64,410

Total overhead cost $ 179,210


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

Required:

Estimate how much of the $262,310 of overhead cost in June was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $262,310 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs within the relevant range.)

 

Reference no: EM13510273

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