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25 April, 20:44

Erkkila Inc. reports that at an activity level of 6,000 machine-hours in a month, its total variable inspection cost is $425,330 and its total fixed inspection cost is $162,477. What would be the average fixed inspection cost per unit at an activity level of 6,300 machine-hours in a month?

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  1. 26 April, 00:28
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    Average inspection cost = $25.79 per machine-hour

    Explanation:

    Giving the following information:

    The total fixed inspection cost is $162,477.

    Number of machine-hours = 6,300

    To calculate the average fixed inspection cost, we need to divide the total fixed inspection cast by the number of machine-hours:

    Average inspection cost = 162,477/6,300 = $25.79 per machine-hour
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