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Homework answers / question archive / Sonor Systems undertakes its own machine maintenance
Sonor Systems undertakes its own machine maintenance. The depreciation on the equipment is $20,000 per year and operating cost is $2 per machine hour. Last year 275,000 machine hours were used to produce 100,000 units. Compute the total machine maintenance cost for last year.
a.$550,000
b.$420,000
c.$20,000
d.$570,000
Total Machine Maintenance Cost = Depreciation + Operating Cost
Operating Cost for last year = 275,000 * $2
Operating Cost for last year = $550,000
Total Machine Maintenance Cost = $20,000 + $550,000
Total Machine Maintenance Cost = $570,000
Option d is correct.
