Question

At an activity level of 6,900 units in a month, Zeus 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 of both fixed and variable costs combined 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:

Total cost= $650,857

Explanation:

Giving the following information:

At an activity level of 6,900 units in a month, Zeus Corporation's total variable maintenance and repair cost is $408,756, and its total fixed maintenance and repair cost is $230,253.

We need to calculate the total cost of 7,100 units. Because it is between the relevant range, fixed costs will remain the same. We need to determine the unitary variable cost.

Unitary variable cost= total variable cost/ unit

Unitary variable cost= 408,756/6,900= $59.24

Total cost= 59.24*7,100 + 230,253= $650,857