Factory maintenance costs are estimated for Bing Company based on the level of machine hours used.If total monthly fixed costs are $150,000,variable costs per machine hour are $8,and 15,000 machine hours are expected to be used in June,which of the following would be the best estimate of total maintenance costs?
A)$150,000
B)$120,000
C)$30,000
D)$270,000
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

Total maintenance costs can be calculated using the formula:

Total maintenance costs = Fixed costs + (Variable cost per machine hour x Total machine hours)

Plugging in the given values, we get:

Total maintenance costs = $150,000 + ($8 x 15,000)
Total maintenance costs = $150,000 + $120,000
Total maintenance costs = $270,000

Therefore, choice (D) is the best estimate of total maintenance costs.

Factory Maintenance Costs Are Estimated for Bing Company Based on the Level