Asked by Ashley Bull Calf on Jun 26, 2024
Verified
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
Variable Cost
Expenses that change in direct proportion to the amount of goods or services produced.
Fixed Cost
Expenses that do not change with the level of production or sales, such as rent, salaries, and loans.
- Absorb the theories related to fixed, variable, and comprehensive costs within the relevant spectrum.
- Analyze how alterations in activity levels affect costs and computations per unit.
Verified Answer
CL
Christopher LopezJun 30, 2024
Final Answer :
D
Explanation :
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
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
Learning Objectives
- Absorb the theories related to fixed, variable, and comprehensive costs within the relevant spectrum.
- Analyze how alterations in activity levels affect costs and computations per unit.