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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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  1. 27 May, 17:10
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    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
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