The Blaine Company Is a Highly Automated Manufacturer

question 20

Multiple Choice

The Blaine Company 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 variable cost per setup for utilities is most likely closest to

• A)£ 8.00 per setup.
• B)£12.44 per setup.
• C)£ 4.00 per setup.
• D)£14.66 per setup.

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