TG 212 Final Exam (Fall 2017) value 3.70 points Oaklis Company has provided the

Question

TG 212 Final Exam (Fall 2017) value 3.70 points Oaklis Company has provided the following data for maintenance cost Prior YearC Current Year Machine hours Maintenance cost 15.400 8,300 $32,100$35,340 Maintenance maintenance cost are closest to e cost is a mixed cost with varlable and fixed components. The fixed and variable components of O $13.620 per year plus $1.20 per machine hour O $13.620 per year plus $.833 per machine hour O $32.100 per year plus $1.20 per machine hour S21720 per year plus $ 833 per machine hour tO

Explanation / Answer

A. $13,620 per year plus $1.20 per machine hour

Variable cost per unit = Change in cost ÷ Change in activity

= $3,240 ÷ 2,700 machine-hours

= $1.20 per machine-hour

Fixed cost = Total cost - Variable cost element

= $35,340 - ($1.20 per machine-hour × 18,100 machine-hours)

= $35,340 - $21,720

= $13,620

Machine-Hours Maintenance Cost High level of activity 18,100 $35,340 Low level of activity 15,400 $32,100 Change 2,700 $3,240

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