Reference no: EM131753195

Problem - ABC Company's total overhead costs at various levels of activity are presented below:

Machine Hours Total Overhead Costs

March 60,000 $216,800

April 50,000 $194,000

May 70,000 $239,600

June 80,000 $262,400

Assume that the overhead costs above consist of utilities, supervisory salaries, and maintenance. At the 50,000 machine-hour level of activity these costs are:

Utilities (V)        $  54,000

Supervisory salaries (F)     62,000

Maintenance (M)        78,000

Total overhead cost        $194,000

V = Variable; F = Fixed; M = Mixed

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

Required:

a. Estimate the maintenance cost for June.

b. Use the high-low method to estimate the cost formula for maintenance cost.

c. Estimate the TOTAL overhead cost at an activity level of 55,000 machine hours.  (Note that Part C is asking about total overhead cost and not just maintenance cost)