Erkkila Inc. reports that at an activity level of 7,100 machine- hours in a month, its total variable inspection cost is $424,730 and its total fixed inspection cost is $183,446. What would be the average fixed inspection cost per unit at an activity level of 7,400 machine-hours in a month? Assume that this level of activity is within the relevant range. a. $24.79 b. $85.66 c. $25.84 d. $33.98

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 28E: Assume that the inspection activity has an expected cost of 120,000. Expected direct labor hours are...
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Erkkila Inc. reports that at an activity level of 7,100 machine-
hours in a month, its total variable inspection cost is
$424,730 and its total fixed inspection cost is $183,446. What
would be the average fixed inspection cost per unit at an
activity level of 7,400 machine-hours in a month? Assume
that this level of activity is within the relevant range.
a. $24.79
b. $85.66
c. $25.84
d. $33.98
Transcribed Image Text:Erkkila Inc. reports that at an activity level of 7,100 machine- hours in a month, its total variable inspection cost is $424,730 and its total fixed inspection cost is $183,446. What would be the average fixed inspection cost per unit at an activity level of 7,400 machine-hours in a month? Assume that this level of activity is within the relevant range. a. $24.79 b. $85.66 c. $25.84 d. $33.98
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