At an activity level of 6,900 units in a month, Zelinski Corporation's total variable maintenance and repair cost is $408,756 and its total fixed maintenance and repair cost is $230,253. What would be the total maintenance and repair cost, both fixed and variable, at an activity level of 7,100 units in a month? Assume that this level of activity is within the relevant range.
A)$648,270
B)$639,009
C)$650,857
D)$657,531

Question

Quizplus · Accepted Answer

First, we need to calculate the variable cost per unit:

Variable cost per unit = Total variable cost / Total units of activity

Variable cost per unit = $408,756 / 6,900 units = $59.30 per unit

Using this information, we can calculate the total variable maintenance and repair cost at an activity level of 7,100 units:

Variable maintenance and repair cost = Variable cost per unit x Total units of activity

Variable maintenance and repair cost = $59.30 per unit x 7,100 units = $420,930

Next, we add the fixed maintenance and repair cost to get the total maintenance and repair cost:

Total maintenance and repair cost = Total fixed cost + Total variable cost

Total maintenance and repair cost = $230,253 + $420,930 = $651,183

However, we rounded the variable cost per unit to two decimal places, so the final answer may differ slightly depending on how many decimal places are used. The closest answer choice is C) $650,857.

At an Activity Level of 6,900 Units in a Month