# Ddetermine how much consists of indirect materials and rent.

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December 22, 2020
###### What is the total manufacturing cost assigned to Job N-60?
December 22, 2020
 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 labour-hours worked in the factory. Total factory overhead costs (in Japanese yen, denoted ¥) at high and low levels of activity for recent years, are provided below:
 Level of Activity Low High Direct labour-hours 170,000 220,000 Total factory overhead costs ¥ 12,462,000 ¥ 14,238,000
 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 170,000-hour level of activity as follows:
 Indirect materials (V) ¥ 5,100,000 Rent (F) 5,032,000 Maintenance (M) 2,330,000 Total factory overhead costs ¥ 12,462,000
 V = variable; F = fixed; M = mixed.
 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 ¥14,238,000 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 ¥14,238,000 consists of indirect materials and rent. Think about the behaviour of variable and fixed costs!)
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