Reference: 06-04 in the O'Donnell Manufacturing Company, at an Activity Level of Level

Multiple Choice

Reference: 06-04
In the O'Donnell Manufacturing Company, at an activity level of 80,000 machine hours, total overhead costs were
$223,000. Of this amount, utilities were $48,000 (all variable) and depreciation was $60,000 (all fixed) . The balance of the overhead cost consisted of maintenance cost (mixed) . At 100,000 machine hours, maintenance costs were $130,000.
Assume that all of the activity levels mentioned in this problem are within the relevant range.
-The variable cost for maintenance per machine hour is?

A) $1.35.
B) $1.30.
C) $0.75.
D) $1.44.