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Question 5 (of 5) value: 10.00 points Echeveria SA is an Argentinian manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility These costs (in Argentinian pesos) at high and low levels of activity over recent years are given below Level of Activity Low 68,200 High 98,200 Total factory overhead costs 390,912 pesos 470,712 pesos The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 68,200 machine-hours level of activity as follows: Indirect materials (variable)126,170 pesos Rent (fixed) Maintenance (mixed) 167,000 97,742 Total factory overhead costs 390,912 pesos For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required 1. Estimate how much of the factory overhead cost of 470.712 pesos at the high level of activity consists of maintenance cost. (Hint. First determine how much of the 470,712 pesos cost consists of indirect materials and rent. Think about the behaviour of variable and fixed costs.) (Do not round intermediate pesos
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Answer #1
Total Factory OH at 98200 MH 470712
Less:
Indirect Material (98200 Mh @ 1.85 per MH) 181670
Rent expense (Fixed) 167000
maintenance cost 122042 pesos
Note:
Indirect material per MH:
Indirect material cost for 68200 Mh 126170
Divide: MH 68200
Indirect material per MH: 1.85
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