At an activity level of 6,900 units in a month, Zeus Corporation's total variable maintenance and repair cost is $408,756, and its total fixed maintenance and repair cost is $230,253. What would be the total maintenance and repair cost of both fixed and variable costs combined at an activity level of 7,100 units in a month? Assume that this level of activity is within the relevant range. a. $ 648,270 b. $ 639,009 c. $ 650,857 d. $ 657,531

Question

Business

Marley Mullen

1 December, 08:13

At an activity level of 6,900 units in a month, Zeus Corporation's total variable maintenance and repair cost is $408,756, and its total fixed maintenance and repair cost is $230,253. What would be the total maintenance and repair cost of both fixed and variable costs combined at an activity level of 7,100 units in a month? Assume that this level of activity is within the relevant range. a. $ 648,270 b. $ 639,009 c. $ 650,857 d. $ 657,531

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Answers (1)

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Selina Finley · Answer 1

The correct answer is C.

Explanation:

Giving the following information:

At an activity level of 6,900 units in a month, Zeus Corporation's total variable maintenance and repair cost is $408,756, and its total fixed maintenance and repair cost is $230,253.

First, we need to calculate the unitary variable cost:

Unitary variable cost = 408,756/6,900 = $59.24

Number of untis = 7,100

Total cost = total variable cost + total fixed cost

TC = 59.24*7,100 + 230,253 = $650,857