At an activity level of 8,400 machine-hours in a month, Curt Corporation's total variable production engineering cost is $732,480 and its total fixed production engineering cost is $180,400. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 8,800 machine-hours in a month?

Question

Business

Pearson

27 May, 15:34

At an activity level of 8,400 machine-hours in a month, Curt Corporation's total variable production engineering cost is $732,480 and its total fixed production engineering cost is $180,400. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 8,800 machine-hours in a month?

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Ashlee Barnett · Answer 1

The total production engineering cost per machine-hour, at an activity level of 8,800 machine-hours in a month: $107.7

Explanation:

At an activity level of 8,400 machine-hours in a month, Curt Corporation's total variable production engineering cost is $732,480.

Variable production engineering cost per unit = $732,480/8,400 = $87.2

At an activity level of 8,800 machine-hours in a month, total fixed production engineering cost is $180,400 - not changing.

Total variable production engineering cost = $87.2 x 8,800 = $767,360

Total production engineering cost = Total variable production engineering cost + total fixed production engineering cost = $767,360 + $180,400 = $947,760

Total variable production engineering cost per machine-hour = $947,760/8,800 = $107.7