At an activity level of 4,000 machine-hours in a month, Curt Corporation's total variable production engineering cost is $154,200 and its total fixed production engineering cost is $129,000. What would be the total production engineering cost per unit, both fixed and variable, at an activity level of 4,300 machine-hours in a month? Assume that this level of activity is within the relevant range.
A)$68.33
B)$68.55
C)$70.80
D)$65.86

Question

Quizplus · Accepted Answer

The variable cost per machine-hour is $154,200 / 4,000 = $38.55. At 4,300 machine-hours, the variable cost is 4,300 * $38.55 = $165,765. The total fixed cost remains $129,000. Total cost at 4,300 machine-hours is $165,765 + $129,000 = $294,765. The cost per machine-hour is $294,765 / 4,300 = $68.55.

At an Activity Level of 4,000 Machine-Hours in a Month