(Appendix 5A) the Blaine Corporation Is a Highly Automated Manufacturer

Multiple Choice

(Appendix 5A) The Blaine Corporation is a highly automated manufacturer. At an activity level of 6,000 machine setups, total overhead costs equal $240,000. Of this amount, depreciation totals $80,000 (all fixed) and lubrication totals $72,000 (all variable) . The remaining $88,000 of the total overhead cost consists of utility cost (mixed) . At an activity level of 9,000 setups, utility cost totals $112,000.
Assume that the relevant range includes all of the activity levels mentioned in this problem.
-The variable cost per setup for utilities is most likely closest to:

A) $ 8.00 per setup
B) $12.44 per setup
C) $ 4.00 per setup
D) $14.66 per setup