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Question

Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 41,000 machine-hour level of activity is:

Nova Company’s management wants to break down the maintenance cost into its variable and fixed cost elements.

Estimate how much of the $268,770 of overhead cost in July was maintenance cost. (*Hint:* To do this, it may be helpful to first determine how much of the $268,770 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) **(Do not round intermediate calculations.)**

Using the high-low method, estimate a cost formula for maintenance. **(Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.)**

Y=______+______x

Express the company’s *total* overhead cost in the linear equation form *Y = a + bX*. **(Do not round your intermediate calculations. Round the "Variable cost per unit" to 2 decimal places.)**

Y=______+______x

What *total* overhead cost would you expect to be incurred at an activity level of 46,000 machine-hours? **(Do not round intermediate calculations.)**

Nova Company’s total overhead cost at various levels of activity are presented below: |