ErkkilaIncorporated 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

First, calculate the variable cost per machine-hour: $69,846 / 2,100 hours = $33.26 per machine-hour. Then, multiply this rate by the new activity level: $33.26 * 2,400 hours = $79,824.

ErkkilaIncorporated Reports That at an Activity Level of 2,100 Machine-Hours