Carson Company manufactures digital thermometers. Based on past experience, Carson has found that its total maintenance costs can be represented by the following formula; Main¬

tenance cost = $100,000 + $2X, where X = Number of thermometers. Last year, Carson pro¬

duced 200,000 thermometers. Actual maintenance costs for the year were as expected.

Required:

1. What is the activity, and what is the activity driver for the activity?

2. What is the total maintenance cost incurred by Carson last year?

3. What is the total fixed maintenance cost incurred by Carson last year?

4. What is the total variable maintenance cost incurred by Carson last year?

5. What is the maintenance cost per unit produced?

6. What is the fixed maintenance cost per unit?

7. What is the variable maintenance cost per unit?

8. Recalculate Requirements 5, 6, and 7 for the following levels of production:

(a) 100,000 units and

(b) 400,000 units. Explain this outcome.