Answer:
Total cost= $72,000
Explanation:
Giving the following information:
Bennett Company’s high and low level of activity last year was 150,000 units produced in June and 50,000 units produced in January. Machine maintenance costs were $104,000 in June and $40,000 in January.
We need to use the following formulas:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (104,000 - 40,000) / (150,000 - 50,000)= $0.64 per unit
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
FC= 104,000 - (0.64*150,000)= 8,000
Fixed costs= LAC - (Variable cost per unit* LAU)
FC= 40,000 - (0.64*50,000)= 8,000
Now, we can calculate the cost of 100,000 units:
Total cost= o.64*100,000 + 8,000= $72,000
