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25 May, 11:24

At an activity level of 9,200 machine-hours in a month, Nooner Corporation's total variable production engineering cost is $825,240 and its total fixed production engineering cost is $249,100. What would be the total production engineering cost per unit, both fixed and variable, at an activity level of 9,400 machine-hours in a month? Assume that this level of activity is within the relevant range

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  1. 25 May, 14:07
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    variable per unit $ 89.72

    fixed cost per unit $ 26.5

    total unit cost $ 116.22

    Explanation:

    Variable cost per machine-hour

    825,420 / 9,200 = 89.72

    This will keep constant at unit level thus, at 9,400 the variable cost will still be 89.72

    Now fixed cost: 249,100 / 9,400 output = 26.5

    This is the fixed cost per unit considering a 9,400 untis output

    Now, we add them to get the total unit cost:

    89.72 + 26.5 = 116.22
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