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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 Activ Low 51,000 High 68,000 Direct labor-hours Total factory overhead costs 267,200 $299,500 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 51,000-hour level of activity as follows Indirect materials (variable) Rent (fixed) Maintenance (mixed) $ 76,500 136,000 54,700 Total factory overhead costs $267,200 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 $299,500 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 $299,500 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.) Maintenance cost at high level of activity2. Using the high-low method, estimate a cost formula for maintenance. (Do not round calculations. Round Variable cost element to 2 decimal places.) Direct Labor-Maintenance Hours Cost High level of activity Low level of activity Change Variable cost element per DLH Fixed cost element direct labor-hours? (Do not round intermediate calculations.) Total factory overhead cost

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