Asked by Logan Jordan on Jun 30, 2024

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What would be the average fixed cost per unit at an activity level of 5,200 units? Assume that this level of activity is within the relevant range.

A) $6.24
B) $6.00
C) $14.94
D) $32.59

Fixed Cost

Financial obligations that are static and do not vary with production levels or sales numbers, such as rent, salary payments, and insurance fees.

Activity Level

A measure of the volume of production or operations, often used in cost accounting to allocate variable and fixed costs appropriately.

  • Determine and scrutinize variable, fixed, and mixed costs.
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DE
Daniel EllenburgJul 03, 2024
Final Answer :
B
Explanation :
Average fixed cost per unit = Total fixed cost ÷ Total activity
= $31,200 ÷ 5,200 units
= $6.00 per unit
Reference: CH01-Ref30
At an activity level of 9,000 machine-hours in a month, Moffatt Corporation's total variable maintenance cost is $390,240 and its total fixed maintenance cost is $368,280.