Answer:
2017:
Total variable cost= $600,000
Total fixed cost= $1,900,000
2018:
Total variable cost= $800,000
Total fixed cost= $1,900,000
Explanation:
Giving the following information:
The factory opened in 2014, and by the end of the year, they had made 30,000 batteries for a total cost of $2,500,000. In 2015, they made 40,000 batteries for an additional cost of $200,000.
I will assume that the fixed costs remain constant in both years.
We can calculate the variable cost per unit using the incremental cost.
Variable cost per unit= incremental cost/incremental units
Variable cost per unit= 200,000/10,000= $20
Now, we can calculate the fixed costs:
2017:
Total variable cost= 30,000*20= $600,000
Total fixed cost= 2,500,000 - 600,000= $1,900,000
2018:
Total variable cost= 40,000*20= $800,000
Total fixed cost= $1,900,000
