Reference: 06-05
Maxwell Company has a total expense per unit of $2.00 at the 16,000 unit level of activity and total expense per unit of $1.95 at the 21,000 unit level of activity.
-The best estimate of the total fixed cost per period for Maxwell Company is
A)$40,950.
B)$29,190.
C)$3,360.
D)$32,000.

Question

Quizplus · Accepted Answer

The difference in total cost per unit at different activity levels indicates variable costs. The fixed cost can be calculated by finding the total cost at each level and subtracting the variable cost component. The fixed cost remains constant, and using the given data, it calculates to $3,360.

Reference: 06-05 Maxwell Company Has a Total Expense Per Unit of $2.00