Question

Cost Behavior

Alisha Incorporated manufactures medical stents for use in heart bypass surgery. Based on past experience, Alisha has found that its total maintenance costs can be represented by the following formula: Maintenance Cost = $1,825,000 + $350X, where X = Number of Heart Stents. Last year, Alisha produced 36,000 stents. Actual maintenance costs for the year were as expected.

Required:

If required, round your answers to the nearest cent.

1. What is the total maintenance cost incurred by Alisha last year?

$fill in the blank 1

2. What is the total fixed maintenance cost incurred by Alisha last year?

$fill in the blank 2

3. What is the total variable maintenance cost incurred by Alisha last year?

$fill in the blank 3

4. What is the maintenance cost per unit produced?

$fill in the blank 4per unit

5. What is the fixed maintenance cost per unit?

$fill in the blank 5per unit

6. What is the variable maintenance cost per unit?

$fill in the blank 6per unit

7. Alisha management could improve its cost function to better understand past maintenance costs and predict future maintenance costs by.

Answer 1

1.total Maintenance Cost during last year=$14425000.

calculation:-

total Maintenance Cost= $1,825,000+$350x36000 =$14425000.

2.total fixed maintanance cost incurred during last year=$1825000.

3.total variable maintanace cost in last year=$350 per stent x36000 stents=$12600000.

4.maintanace cost per unit produced=total maintanace cost/units produced=$14425000/36000 units=$400.69 per stent

5.fixed maintanace cost per unit=total fixed maintanace cost/units produced=$1825000/36000 stents=$50.69 per stent.

6.variable maintanace cost per stent=total variable cost/total stents produced=$12600000./36000=$350 per stent.

7. Maintenance Cost = $1,825,000 + $350X

at any point using the above formula,the company can find the total maintanance cost by putting the value of number of units at that point