The Thomas Company's Total Overhead Costs at Various Levels of Activity

The Thomas Company's total overhead costs at various levels of activity are presented below:
$$\begin{array} { | l | r | r | } \hline \text { Month } & \text { Direct Labor Hours } & \text { Total Overhead } \\\hline \text { Juby } & 7,500 & \$ 272,000 \\\hline \text { August } & 6,000 & 234,000 \\\hline \text { September } & 9,000 & 319,000 \\\hline \text { October } & 10,500 & 340,500 \\\hline\end{array}$$

Assume that the overhead costs above consist of utilities,supervisory salaries,and maintenance.The breakdown of these costs at the 9,000 direct labor hour level of activity is as follows:
$$\begin{array} { | l | r | } \hline \text { Utilities } ( \mathrm { V } ) & \$ 137,700 \\\hline \text { Superyisory Salaries (F) } & 80,000 \\\hline \text { Maintenance } ( \mathrm { M } ) & 101,300 \\\hline & 319,000 \\\hline\end{array}$$

Required:
(a. )Using the high-low method,determine the cost formula for maintenance.(b. )Express the company's total overhead costs in linear equation form.

Correct Answer:

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(a. )$12,000 + 8.36667 × Direct Labor H...

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