Question

At an activity level of 6,900 units in a month, Zelinski 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, both fixed and variable, at an activity level of 7,100 units in a month? Assume that this level of activity is within the relevant range.

Answer 1

Answer:

$650,857

Explanation:

The computation of the total cost is shown below:

Total cost = Variable cost + fixed cost

where,

variable cost for 7,100 units is

= total variable maintenance and repair cost ÷ activity level for 6,900 units ×  activity level for 7,100 units

= $408,756 ÷ 6,900 units × 7,100 units

= $420,604

And, the fixed cost is $230,253

So, the total cost is

= $420,604 + $230,253

= $650,857