Answer:
The correct answer is A.
Explanation:
<u>First, we need to separate the fixed costs and calculate the unitary variable costs:</u>
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Fixed costs:
Depreciation on factory building= 70,000
Total unitary varaible cost:
Total cost= 800,000 + 250,000 + 250,000= $1,300,000
Unitary cost per hour= 1,300,000 / 50,000= $26
<u>Now, the total cost for 60,000 hours:</u>
Total cost= 26*60,000 + 70,000
Total cost= $1,630,000
