At an activity level of 7,200 machine-hours in a month, Falks Corporation's total variable production engineering cost is $556,416 and its total fixed production engineering cost is $226,008.What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 7,300 machine-hours in a month? Assume that this level of activity is within the relevant range.
A)$107.93
B)$107.18
C)$108.67
D)$108.24

Question

Quizplus · Accepted Answer

Variable cost per machine-hour = $556,416 ÷ 7,200 machine-hours = $77.28 per machine-hour
Fixed cost per machine-hour at 7,300 machine-hours = $226,008 ÷ 7,300 machine-hours = $30.96 per machine-hour
Total cost = Variable cost + Fixed cost
= $77.28 per machine-hour + $30.96 per machine-hour
= $108.24 per machine-hour

At an Activity Level of 7,200 Machine-Hours in a Month