Inuvik Company Manufactures Drill Presses

Essay

Inuvik Company manufactures drill presses. Based on past experience, Inuvik has found that its total manufacturing overhead cost can be represented by the following formula: total manufacturing overhead cost = $40,000 + $1.25x, where x = number of machine hours. Last year, Inuvik incurred 150,000 machine hours.
Required:
A. What was the total manufacturing overhead cost incurred by Inuvik last year?
B. What was the total variable manufacturing overhead cost incurred by Inuvik last year?
C. What was the total manufacturing overhead cost per machine hour last year?
D. What was the fixed manufacturing overhead cost per machine hour last year?
E. If Inuvik incurs 180,000 machine hours next year, what will be the total manufacturing overhead cost per machine hour?