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Pinnacle Corporation is a manufacturing company operating numerous machines. These require regular maintenance to keep them operational. The fixed portion of maintenance costs are $3,000 per month. Maintenance costs are also incurred at the rate of $5 per setup and $0.50 per unit produced. The company produced 23,000 units in 800 batches during a particular month. What will be the total cost of maintenance for this month?a. $3,000 b. $18,500 c. $7000 d. $11,500

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Answer:

B) $18,500

Explanation:

To calculate the total cost of maintenance for this month we can use the following formula:

total costs = fixed portion + variable set up costs + variable unit costs

total costs = $3,000 + ($5 x 800) + ($0.50 x 23,000) = $3,000 + $4,000 + $11,500 = $18,500

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