ErkkilaIncorporated reports that at an activity level of 2,100 machine-hours in a month, its total variable inspection cost is $69,846 and its total fixed inspection cost is $9,072.What would be the average fixed inspection cost per unit at an activity level of 2,400 machine-hours in a month? Assume that this level of activity is within the relevant range.
A) $37.58
B) $4.32
C) $15.23
D) $3.78

Question

Quizplus · Accepted Answer

Fixed costs remain constant regardless of the level of activity. Therefore, the total fixed inspection cost of $9,072 divided by 2,400 machine-hours equals $3.78 per machine-hour.

ErkkilaIncorporated Reports That at an Activity Level of 2,100 Machine-Hours