Question

At an activity level of 9,400 machine-hours in a month, Curt Corporation's total variable production engineering cost is $823,440 and its total fixed production engineering cost is $195,020.

What would be the total production engineering cost per hour, both fixed and variable, at an activity level of 9,800 machine-hours in a month?

Answer 1

$107.5 per machine hour.

Step-by-step explanation:

Step 1: Calculate the total production engineering cost per hour at activity level of 9,800 machine hours in a month

a. Calculate the Variable cost per Unit = total variable cost/units produced

= $823,440/9400 (initial machine hours)

= $87.6 per machine hour

b. calculate the total variable cost for 9,800 machine hours

=variable cost per unit x 9,800 hours

= $858,480

c. Calculate total production cost for 9,800 hours

=total variable cost + fixed cost

= $858,480 + $195,020

= =$1,053,500

d) calculate the production engineering cost per unit

= Total cost for 9,800/ number of hours

=$1, 053, 500 / 9800 hours

=$107.5 per machine hour.