confused on chapter 2 347622
Aug 29, 2021 | Uncategorized
| 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. |
| 1. |
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.)
|
