Question

Erkkila Inc. reports that at an activity level of 7,100 machine-hours in a month, its total variable inspection cost is $424,730 and its total fixed inspection cost is $183,446. What would be the average fixed inspection cost per activity unit at an activity level of 7,400 machine-hours in a month

Answer 1

Average fixed cost per unit= $24.79

Step-by-step explanation:

Giving the following information:

The total fixed inspection cost is $183,446.

Activity units= 7,400 machine-hours

To calculate the average fixed inspection cost, we have to divide the total fixed inspection cost by the actual number of activity units.

Average fixed cost per unit= 183,446/7,400

Average fixed cost per unit= $24.79