Problem:
Erkkila Inc. reports that at an activity level of 6,700 machine-hours in a month, its total variable inspection cost is $424,130 and its total fixed inspection cost is $166,530.
Required:
Question: What would be the average fixed inspection cost per unit at an activity level of 7,000 machine-hours in a month? Assume that this level of activity is within the relevant range.
A $23.79
B $88.16
C $24.86
D $38.45
Note: Please show the work not just the answer.