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Question - RA-20588 company manufactures a specialized equipment, At the lowest activity level of 4,200 units, the company incurs $179,600 in maintenance costs, This amount includes equipment cost of $40,000 (all fixed) and inspection cost of $42,000 (all variable). The remaining $97,600 of the maintenance costs consists of expert testing cost (mixed). At the highest activity level of 6,200 units, expert testing cost totals $133,600.
Assume that the relevant range includes all of the activity levels mentioned in this problem for the RA-20588 company.
Suppose the RA-20588 company uses the high-low method to estimate its maintenance cost. If the RA-20588 company plans to produce 5,000 units the next period, how much would the RA-20588 company's total expected maintenance cost be?
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This individual assignment is based on the TerraCycle Inc.
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A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.
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