Answer:
Total cost per machine hour at activity level of 9,500 hours = $88.10 + $23.40 = $111.50
Explanation:
Provided that,
At activity level of 9,400 machine hours
Variable production cost = $828,140
Total fixed cost = $222,300
At an activity level of 9,500 machine hours, provided it is in same range, therefore, as fixed cost will remain same, but variable cost will increase as the activity is increased by 100 hours, but rate per hour will remain same.
Revised variable cost = [tex]\frac{828,140}{9,400} = $88.10[/tex]
= $88.10 [tex]\times[/tex] 9,500 machine hours = $836,950
Fixed cost will be same as before = $222,300
Total cost per machine hour variable = $88.10
Fixed cost per machine hour = $222,300/9,500 = $23.4
Total cost per machine hour at activity level of 9,500 hours = $88.10 + $23.40 = $111.50
