In the O'Donnell Manufacturing Company, at an Activity Level of 80,000

Multiple Choice

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 amortization was $60,000 (all fixed) . The balance of the overhead costs 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.

-What is the variable cost for maintenance per machine hour?

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