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rebecca daniel
on Dec 17, 2024

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The Blaine Corporation is a highly automated manufacturer. At an activity level of 6,000 machine setups, total overhead costs equal $240,000. Of this amount, depreciation totals $80,000 (all fixed) and lubrication totals $72,000 (all variable) . The remaining $88,000 of the total overhead cost consists of utility cost (mixed) . At an activity level of 9,000 setups, utility cost totals $112,000.Assume that the relevant range includes all of the activity levels mentioned in this problem.The total fixed overhead costs for Blaine Corporation are most likely closest to:

A) $112,000
B) $120,000
C) $40,000
D) $80,000

Mixed Cost

Mixed cost includes both fixed and variable components, meaning part of the cost varies with the level of activity while the other part remains constant.

Overhead Costs

Expenses related to the operation of a business that are not directly associated with the production of goods or services, such as rent, utilities, and administrative salaries.

Machine Setups

The process of preparing and adjusting machines for a specific production run.

  • Determine and gauge the variable and fixed constituents of costs through the high-low method.
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JV
Julian VargasDec 22, 2024
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