[The following information applies to the questions displayed below.]

Erkkila Inc. reports that at an activity level of 7,900 machine-hours in a month, its total variable inspection cost is $210,061 and its total fixed inspection cost is $191,970.

 24.

award:
0 out of
10.00 points

 

 

What would be the average fixed inspection cost per unit at an activity level of 8,100 machine-hours in a month? Assume that this level of activity is within the relevant range.

	$50.89
	$24.30
→	$23.70
	$32.96

Average fixed inspection cost = Total fixed inspection cost ÷ Total
activity = $191,970 ÷ 8,100 machine-hours
= $23.70 per machine-hour

Multiple Choice

Difficulty: Easy

Learning Objective: 02-03 Understand cost behavior patterns including variable costs, fixed costs, and mixed costs.

 25.

award:
0 out of
10.00 points

 

 

What would be the total variable inspection cost at an activity level of 8,100 machine-hours in a month? Assume that this level of activity is within the relevant range.

	$210,061
	$196,830
→	$215,379
	$402,031

Variable inspection cost per unit = Total variable inspection cost ÷ Total activity
= $210,061 ÷ 7,900 machine-hours
= $26.59 per machine-hour

Total variable inspection cost = Variable inspection cost per unit × Total activity
= $26.59 per machine-hour × 8,100 machine-hours
= $215,379