Question

At a total of 150,000 machine hours, a company had total product costs of $2,100,000. This total was made up of $450,000 for Cost 1 (which is variable), $900,000 for Cost 2 (which is fixed), and $750,000 for Cost 3 (which is mixed). At a level of 200,000 machine hours, the company had total product costs of $2,390,000. Of this $2,390,000, how much is Cost 3

Answer 1

The cost 3 is 890000 dollars.

Step-by-step explanation:

Total product costs = $2100000

Variable cost included in total product costs = $450000

Fixed cost included in total costs = $900,000

Mixed costs = $750000

`\text{Variable cost per machine hour} = (Varible costs)/(Machine hours) \\`

`= (450000)/(150000) \\`

`= $3 dollar`

`\text{Now to find mixed cost when there are 200000 machine hours that has costing 2390000 dollars.} \\`
`total \ costs = 2390000 \ dollars \\`

`variable \ cost \ (cost 1), \ 200000 * 3 = 600000 \ dollars \\`

`Fixed \ costs \ (cost 2) = 900000 \ dollars \\`

`cost 3 (mixed cost) = Total costs - variable cost - Fixed costs`

cost 3 (mixed cost) = 2390000 – 600000 - 900000

cost 3 (mixed cost) = 890000 dollars.