Question

Hermes Logistics had maintenance costs of $63,000 at an output level of 18,000 units. The maintenance cost was a mixed cost, and the fixed portion was $36,000. You have been asked to calculate the total maintenance cost for an output level of 27,000 units. What will you report is the total maintenance cost? A : $45,000 B : $76,500 C : $67,500 D : $81,000

Answer 1

Maintenance cost at 27000 = $76,500

correct option is B $76,500

Step-by-step explanation:

given data

maintenance costs = $63,000

output level = 18,000 units

mixed cost, and the fixed = $36,000

total maintenance cost output level = 27,000 units

solution

we know here that Variable costs at 18000 units i s

Variable costs at 18000 units = 63000 - 36000

Variable costs at 18000 units = $27000

so Variable unit cost is =
`(2700)/(18000)`

Variable unit cost = 1.5

and

Maintenance cost at 27000 units will be

Maintenance cost at 27000 = Fixed cost + 27000 × Unit variable cost

Maintenance cost at 27000 = 36000 + (1.5 × 27000)

Maintenance cost at 27000 = $76,500

correct option is B $76,500