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 labor-hours worked in the factory. Total factory overhead costs (in Japanese yen, denoted ¥) at high and low levels of activity for recent years are given below:
Level of Activity
Low High
Direct labor-hours 72,300 96,400
Total factory overhead costs ¥287,140 ¥330,520
The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 72,300-hour level of activity as follows:
Indirect materials (variable) ¥108,450
Rent (fixed) 124,000
Maintenance (mixed) 54,690
Total factory overhead costs
¥287,140
To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements.
Requirement 1:
Estimate how much of the ¥330,520 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 ¥330,520 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) (Omit the "¥" sign in your response.)