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Unformatted text preview: Variable cost per unit is 6,200/2,200 units = 2.40 Fixed maintenance cost 21,000-(3,900*2.4)=11,640. Cost function=Y=F+VX=11,640+2.40*Number of units produced Set-Up Maintenance Costs Units Produced High 26,000 27.50 Low 15,000 10.30 Difference 11000 17.2 The fixed maintenance cost per set-ups is 8412.92 and the variable cost per unit is 639.53 Variable cost per unit is 11,000/17.2 =639.53 per set-up Fixed maintenance cost is 26000-(27.5*639.53) = 8412.92 Cost function Y=F+VX=8412.92+639.53* number of set-ups 3) The number of set-ups is a better cost driver because the costs are earned during the setting up of the machine rather than during the production phase....
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This note was uploaded on 06/04/2010 for the course BUSINESS M ACC561 taught by Professor Johnson during the Spring '10 term at University of Phoenix.
- Spring '10