At an activity level of 9,100 machine-hours in a month, Falks Corporation’s tota

Question

At an activity level of 9,100 machine-hours in a month, Falks Corporation’s total variable production engineering cost is $803,530 and its total fixed production engineering cost is $161,280. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 9,600 machine-hours in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-06-28, 2017-08-01

Multiple Choice

$105.10
$104.21
$104.75
$105.28

Explanation / Answer

Variable cost/unit=(803530/9100)=$88.3

Hence total costs at 9600 machine hours=(9600*88.3)+161280=$1008960

Hence cost per machine hour=$1008960/9600

=105.10(A)[Total fixed costs and variable cost per unit does not change with change in units].

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