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Nova Company's total overhead cost at various levels of activity are presented below Total Overhead Machine- Month Hours Cost April May June 52,000 42,000 62,000 72,000 $203,860 $181,060 $226,660 $249,460 July Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 42,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost S 50,400 67,000 63.660 181,060 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements Required: 1. Estimate how much of the $249,460 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $249,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.) Maintenance cost in July 2. Using the high-low method, estimate a cost formula for maintenance. (Do not round your intermediate calculations. Round the "Variable cost per machine-hours" to 2 decimal places.) Maintenance Cost Machine- Hours High activity level Low activity level Change Variable cost element per MH Fixed cost element

Nova Company's total overhead cost at various levels of activity are presented below Total Overhead Machine- Month Hours Cost April May June 52,000 42,000 62,000 72,000 $203,860 $181,060 $226,660 $249,460 July Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 42,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost S 50,400 67,000 63.660 181,060 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements Required: 1. Estimate how much of the $249,460 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $249,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.) Maintenance cost in July 2. Using the high-low method, estimate a cost formula for maintenance. (Do not round your intermediate calculations. Round the "Variable cost per machine-hours" to 2 decimal places.) Maintenance Cost Machine- Hours High activity level Low activity level Change Variable cost element per MH Fixed cost element

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter4: Job Order Costing
Section: Chapter Questions
Problem 2PA: York Company Is a machine shop that estimated overhead will be $50,000, consisting of 5,000 hours of...
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Nova Company's total overhead cost at various levels of activity are presented below Total Overhead Machine- Month Hours Cost April May June 52,000 42,000 62,000 72,000 $203,860 $181,060 $226,660 $249,460 July Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 42,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost S 50,400 67,000 63.660 181,060 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements Required: 1. Estimate how much of the $249,460 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $249,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.) Maintenance cost in July 2. Using the high-low method, estimate a cost formula for maintenance. (Do not round your intermediate calculations. Round the "Variable cost per machine-hours" to 2 decimal places.) Maintenance Cost Machine- Hours High activity level Low activity level Change Variable cost element per MH Fixed cost element
Transcribed Image Text:Nova Company's total overhead cost at various levels of activity are presented below Total Overhead Machine- Month Hours Cost April May June 52,000 42,000 62,000 72,000 $203,860 $181,060 $226,660 $249,460 July Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 42,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost S 50,400 67,000 63.660 181,060 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements Required: 1. Estimate how much of the $249,460 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $249,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.) Maintenance cost in July 2. Using the high-low method, estimate a cost formula for maintenance. (Do not round your intermediate calculations. Round the "Variable cost per machine-hours" to 2 decimal places.) Maintenance Cost Machine- Hours High activity level Low activity level Change Variable cost element per MH Fixed cost element
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