Erkkila Inc. reports that at an activity level of 2,100 machine-hours in a month, its total variable inspection cost is $69,846 and its total fixed inspection cost is $9,072. What would be the average fixed inspection cost per unit at an activity level of 2,400 machine-hours in a month? Assume that this level of activity is within the relevant range.
A) $37.58
B) $4.32
C) $15.23
D) $3.78

Question

Quizplus · Accepted Answer

Average fixed inspection cost = Total fixed inspection cost ÷ Total activity
= $9,072 ÷ 2,400 machine-hours
= $3.78 per machine-hour