Grundmann Inc. reports that at an activity level of 6,500 machine-hours in a month, its total variable inspection cost is $487,110 and its total fixed inspection cost is $326,040.
-What would be the average fixed inspection cost per unit at an activity level of 6,600 units in a month? Assume that this level of activity is within the relevant range.
A) $125.10
B) $74.89
C) $50.16
D) $49.40

Question

Quizplus · Accepted Answer

The average fixed inspection cost per unit is calculated by dividing the total fixed inspection cost by the number of units produced. At an activity level of 6,600 units, the average fixed inspection cost per unit would be $326,040 / 6,600 = $49.40.