Erkkila Incorporated reports that at an activity level of 6,600 machine-hours in a month, its total variable inspection cost is $426,230 and its total fixed inspection cost is $188,301.What would be the average fixed inspection cost per unit at an activity level of 6,900 machine-hours in a month? Assume that this level of activity is within the relevant range.
A) $93.11
B) $28.53
C) $37.29
D) $27.29

Question

Quizplus · Accepted Answer

The average fixed inspection cost per unit is calculated by dividing the total fixed inspection cost by the activity level. At an activity level of 6,900 machine-hours, the average fixed inspection cost per unit would be $188,301 / 6,900 = $27.29.

Erkkila Incorporated Reports That at an Activity Level of 6,600