Question

At an activity level of 8,400 units in a month, Braughton Corporation’s total variable maintenance and repair cost is $697,284 and its total fixed maintenance and repair cost is $464,100. What would be the total maintenance and repair cost, both fixed and variable, at an activity level of 8,500 units in a month? Assume that this level of activity is within the relevant range.

Answer 1

Answer:

$1,169,685

Explanation:

The total variable cost is dependent on the level of activities. Usually, it increases as the level of activities increases.

Given that at an activity level of 8,400 units in a month, Braughton Corporation’s total variable maintenance and repair cost is $697,284, at an activity level of 8,500,

the total variable maintenance and repair cost would be

= (8500/8400) × $697,284

= $705,585

Then, the total maintenance and repair cost, both fixed and variable, at an activity level of 8,500 units in a month

= $464,100 + $705,585  (Assuming

= $1,169,685