Nova Company’s total overhead costs at various levels of activity are presented below:Month Machine Hours Total Overhead CostsApril 70,000 $198,000May 60,000 $174,000June 80,000 $222,000July 90,000 $246,000Assume that the total overhead costs above consist of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 60,000 machine-hour level of activity is:Utilites (variable) $48,000Supervisory salaries (fixed) 21,000Maintenance (mixed) 105,000Total overhead costs 4,000Required:1. Estimate how much of the $246,000 of overhead cost in July was maintenance cost2. Using the high-low method, estimate a cost formula for maintenance3. Express the company’s total overhead costs in the linear equation form Y = a + bX4. What total overhead costs would you expect to be incurred at an operating level of 75,000 machine hours?
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