Reference no: EM133360149
Based on past experience, management at Searth Corp. finds the following cost formula provides a reasonable estimate for the company's total annual repair and maintenance costs:
Total annual repair and maintenance cost = $2,418,000 + $26X, where X = machine hours
In 2022, the company used 390,000 machine hours.
1. What was the total annual repair and maintenance cost incurred by the company for 2022?
2. Of the total repair and maintenance cost for the year, what amount was fixed and what amount was variable?
3. What was the total repair and maintenance cost per machine hour for 2022? What was the fixed repair and maintenance cost per machine hour for 2022? What was the variable repair and maintenance cost per machine hour for 2022?
4. What was the monthly fixed repair and maintenance cost incurred by the company? What would be the estimated total repair and maintenance cost for a month that used 34,500 hours?
5. According to the authors of the course textbook, what is meant by cost behaviour?How does cost behaviour relate to the relevant range?