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 + $200x, where X = Number of Heart Stents. Last year, Alisha produced 71,000 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? 2. What is the total fixed maintenance cost incurred by Alisha last year? 3. What is the total variable maintenance cost incurred by Alisha last year? 4. What is the maintenance cost per unit produced? $ per unit 5. What is the fixed maintenance cost per unit?

Answer 1

1.Total Maintenance cost = 1,825,000+200*71000

= $16,025,000

2.Fixed cost = $1,825,000

3.Variable cost = 200*71000

= $14,200,000

4.Per unit = 16,025,000/71,000

= $225.7042

5.Fixed per unit = 1825000/71000 = $25.7042

6.Variable = $200

7.Identify additional drivers