At an activity level of 8700 machine-hours in a month, Falks Corporation's total variable production engineering cost is $728,190 and its total fixed production engineering cost is $232,290. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 8900 machine-hours in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)

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Business

Chelsea Vaughan

18 April, 08:33

At an activity level of 8700 machine-hours in a month, Falks Corporation's total variable production engineering cost is $728,190 and its total fixed production engineering cost is $232,290. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 8900 machine-hours in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)

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Ricky Reed · Answer 1

Total cost = $977,220

Explanation:

Variable cost.

They vary with volume of activity

Variable cost per machine hour = Total variable cost/machine hours

VC per machine hour = 728,190 / 8700 = $83.7 per machine hour

Fixed cost of maintenance

The fixed costs are cost that remain the same within an activity. The don't vary with volume withing an activity range.

Fixed costs = $232,290.

Total cost at 8,900 hours

= variable cost + fixed cost

= ($83.7 * 8900) + $232,290.

Total cost = $977,220