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Question: sawaya co ltd of japan is a manufacturing company whose...

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Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below:

Level of Activity

Low

High

Direct labor-hours

67,500

90,000

Total factory overhead costs

$

314,500

$

364,000

The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 67,500-hour level of activity as follows:

Indirect materials (variable)

$

108,000

Rent (fixed)

136,000

Maintenance (mixed)

70,500

Total factory overhead costs

$

314,500

To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements.

Required:

1. Estimate how much of the $364,000 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $364,000 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.)

  1. Maintenance cost at high level of activity = ________________
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