ErkkilaIncorporated Reports That at an Activity Level of 2,100 Machine-Hours

question 118

Multiple Choice

ErkkilaIncorporated reports that at an activity level of 2,100 machine-hours in a month, its total variable inspection cost is $69,846 and its total fixed inspection cost is $9,072.What would be the average fixed inspection cost per unit at an activity level of 2,400 machine-hours in a month? Assume that this level of activity is within the relevant range.

• A) $37.58
• B) $4.32
• C) $15.23
• D) $3.78

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Definitions:

Quantum Meruit

A legal principle meaning "as much as he has deserved," used to determine the amount of compensation due for services provided when there is no existing contract.

Service

The action or process of serving or providing assistance to others, often in the context of customers or clients.

Estoppel

A rule whereby a person may not deny the truth of a statement of fact made by him or her when another person has relied and acted upon the statement.

Consideration

The benefit or value that must be exchanged between parties to form a valid contract.