Question

Pur Source produces agricultural irrigation equipment. During a year, the amount of overhead costs on a per month basis varies in relation to the machine hours used in a given year. The low for the past year was 4,230 hours, and the expense associated was $88,880. The high for the period was 9,300 hours, and the associated expense was $147,467. During the low month, the $88,880 in overhead costs consisted of indirect materials of $42,300 (a variable expense), rent of $34,000 (a fixed expense), and maintenance costs of $12,580 (a mixed expense). Requirements Requirement 1a. Given the breakdown of expenses in the low period, what are the estimated costs for indirect materials during the high period? (Round to the nearest whole dollar.) The estimated costs for indirect materials are $ 93000. Requirement 1b. Given the breakdown of expenses in the low period, what are the estimated costs for rent during the high period? (Round to the nearest whole dollar.) The estimated costs for rent are $ 34000. Requirement 1c. Given the breakdown of expenses in the low period, what are the estimated costs for maintenance during the high period? (Round to the nearest whole dollar.) The estimated costs for maintenance are $ 20467 . Requirement 2. What is the cost function for maintenance costs? (Round the variable cost to the nearest cent and the fixed cost to the nearest whole dollar.) The cost function for maintenance costs is y = $ 1.56 x + $ 6000. Requirement 3. What amount of maintenance costs would be expected with 7,800 machine hours of work? (Round to the nearest whole dollar.) Expected maintenance costs for 7,800 machine hours of work is $ 18168. Requirement 4. What would be the total overhead costs at 7,800 machine hours? (Round to the nearest whole dollar.) Total overhead costs at 7,800 machine hours are $

Answer 1

Calculate total overhead cost at 7800 Machine hours

Indirect material (7800*10)	78000
Rent	34000
Maintenance (7800*1.56+6000)	18168
Total overhead cost	130168