Question

At an activity level of 9,300 machine-hours in a month, Curt Corporation's total variable production engineering cost is $766,320 and its total fixed production engineering cost is $191,040. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 9,600 machine-hours in a month

Answer 1

$102.3 per machine hour

Step-by-step explanation:

We can compute the total production engineering cost per hour by using the following equation;

Cost per machine hour = (Fixed cost + Variable cost) / Total machine hours

But first, we need to calculate variable cost at 9,600 hours;

= $766,320 × 9,600hr / 9,300hr

= $791,040

Now, cost per machine hour

= $191,040 + $791,040 / 9,600hr

= $982,040 / 9,600hr

= $102.3 per machine hour