Refer to the information for Alisha Incorporated above.
Alisha Incorporated manufactures medical stints 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 ¼ $310,000 þ $16.50X, where X ¼ Number of heart stints. Last year, Alisha produced 150,000 stints. Actual maintenance costs for the year were as expected.
1. What is the total maintenance cost incurred by Alisha last year?
2. What is the total fixed maintenance cost incurred by Alisha last year?
3. What is the total variable maintenance cost incurred by Alisha last year?
4. What is the maintenance cost per unit produced?
5. What is the fixed maintenance cost per unit?
6. What is the variable maintenance cost per unit?
7. Briefly explain how Alisha management could improve its cost function to better understand past maintenance costs and predict future maintenance costs.