Sonor Systems Undertakes Its Own Machine Maintenance

Multiple Choice

Sonor Systems undertakes its own machine maintenance. The depreciation on the equipment is $20,000 per year and operating cost is $2 per machine hour. Last year 275,000 machine hours were used to produce 100,000 units. Compute the total machine maintenance cost for last year.

A) $570,000
B) $550,000
C) $420,000
D) $20,000