Cost Behavior

Alisha Incorporated manufactures medical stents for use in heart bypass surgery. Based on past experience, Alisha has found that its total maintenance costs can be represented by the following formula: Maintenance Cost = $2,125,000 + $375X, where X = Number of Heart Stents. Last year, Alisha produced 45,000 stents. Actual maintenance costs for the year were as expected.

Required:

If required, round your answers to the nearest cent.

1. What is the total maintenance cost incurred by Alisha last year? $fill in the blank 1

2. What is the total fixed maintenance cost incurred by Alisha last year? $fill in the blank 2

3. What is the total variable maintenance cost incurred by Alisha last year? $fill in the blank 3

4. What is the maintenance cost per unit produced? $fill in the blank 4per unit

5. What is the fixed maintenance cost per unit? $fill in the blank 5per unit

6. What is the variable maintenance cost per unit? $fill in the blank 6per unit

7. Alisha management could improve its cost function to better understand past maintenance costs and predict future maintenance costs by.

Maintaining better cost records.

Hiring a good cost accountant.

Identifying additional drivers of maintenance cost.

Reducing cost drivers for maintenance cost.