Question

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

Answer 1

Answer:

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