Deidoro Company has provided the following data for maintenance cost:
Maintenance cost is a mixed cost with variable and fixed components.The fixed and variable components of maintenance cost are closest to:
A) $26,600 per year; $3.10 per machine hour
B) $9,000 per year; $2.20 per machine hour
C) $9,000 per year; $3.10 per machine hour
D) $26,600 per year; $2.20 per machine hour

Question

Deidoro Company has provided the following data for maintenance cost:
 Maintenance cost is a mixed cost with variable and fixed components.The fixed and variable components of maintenance cost are closest to:
A) $26,600 per year; $3.10 per machine hour 
B) $9,000 per year; $2.20 per machine hour 
C) $9,000 per year; $3.10 per machine hour 
D) $26,600 per year; $2.20 per machine hour

Quizplus · Accepted Answer

11ea7761_1883_dfe8_81a5_db465e66c043_TB2580_00 Variable cost per unit = Change in cost ÷ Change in activity
= $4,400 ÷ 2,000 machine-hours
= $2.20 per machine-hour
Fixed cost = Total cost - Variable cost element
= $31,000 - ($2.20 per machine-hour × 10,000 machine-hours)
= $31,000 - $22,000
= $9,000

Deidoro Company Has Provided the Following Data for Maintenance Cost