Question

Rec Equipment incurred​ $58,500 in total costs when it produced​ 9,000 balls. Total fixed costs are​ $36,000. What is the total cost when it produces​ 12,000 balls? A. ​$78,000.00 B. ​$62,500.00 C. ​$30,000.00 D. ​$66,000.00

Answer 1

Answer:

The correct answer is option (D).

Explanation:

According to the scenario, the given data are as follows:

Total Cost = $58,500

Total units = 9,000

Total fixed cost = $36,000

So, we can calculate the total cost for 12,000 balls by using following formula:

Total Cost for 12,000 balls = (12,000 × Variable cost per unit) + Fixed cost

Where, variable cost per unit = (Total cost - Fixed cost) ÷ Total units

= ($58,500 - $36,000) ÷ 9,000 = $2.5

By putting the value, we get

Total Cost for 12,000 balls = (12,000 × $2.5) + $36,000

= $66,000.