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 total variable inspection cost at an activity level of 2,400 machine-hours in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)
A) $78,918
B) $69,846
C) $79,824
D) $10,368

Question

Quizplus · Accepted Answer

Variable inspection cost per unit = Total variable inspection cost ÷ Total activity
= $69,846 ÷ 2,100 machine-hours
= $33.26 per machine-hour
Total variable inspection cost = Variable inspection cost per unit × Total activity
= $33.26 per machine-hour × 2,400 machine-hours
= $79,824