Deidoro Company has provided the following data for maintenance cost: Maintenance cost is a mixed cost with variable and fixed components.The fixed and variable components of maintenance cost are closest to:

Question

Deidoro Company has provided the following data for maintenance cost:   Maintenance cost is a mixed cost with variable and fixed components.The fixed and variable components of maintenance cost are closest to:

Quizplus · Accepted Answer

11ea7998_5e2e_b363_911b_13d5f343b58f_TB2627_00_TB2627_00 Variable cost per unit = Change in cost ÷ Change in activity
= $4,400 ÷ 2,000 machine-hours
= $2.20 per machine-hour
Fixed cost = Total cost - Variable cost element
= $31,000 - ($2.20 per machine-hour × 10,000 machine-hours)
= $31,000 - $22,000
= $9,000

Deidoro Company Has Provided the Following Data for Maintenance Cost