Question

At an activity level of 9,000 machine-hours in a month, Kirk Corporation's total variable production engineering cost is $796,500 and its total fixed production engineering cost is $235,290. Question: What would be the total production engineering cost per unit, both fixed and variable, at an activity level of 9,300 machine-hours in a month? Assume that this level of activity is within the relevant range.

Answer 1

Answer:

$113.80 per unit

Explanation:

The computation is shown below:

For computing the total production engineering cost per unit, first we have to determine the variable cost per hour which is shown below:

Variable cost per hour = ($796,500) ÷ (9,000 machine hours) × (9,300 machine hours)

= $823,050

And, the fixed cost = $235,290

So, the total cost would be

= $823,050 +  $235,290

= $1,058,390

So, the total production engineering cost per unit would be

= $1,058,390 ÷ 9,300 machine$ hours

= $113.80 per unit