Question

When they produce 20,000 units per month, sanders incorporated has variable costs of $392,000 and fixed costs of $242,000. if sanders increases their production to 25,000 units, by how much will their budgeted costs increase?

Answer 1

On a average of 12.1cent per unit ($242000 divided 20,000 gives a fixed cost) they will increase their budget to $302,500 fixed cost giving a total increase of $60,500.