Erkkila Inc. reports that at an activity level of 6,500 machine-hours in a month, its total variable inspection cost is $426,080 and its total fixed inspection cost is $183,872. What would be the average fixed inspection cost per unit at an activity level of 6,800 machine-hours in a month? Assume that this level of activity is within the relevant range.

$27.04

$93.84

$28.29

$37.26

2.

A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $4,980 and is paid at the beginning of the first year. Eighty percent of the premium applies to manufacturing operations and twenty percent applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?

Product

Period

$4,980

$0

$3,984

$996

$2,656

$664

$1,328

$332