Question

Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $28,000 after deducting variable costs of $77,000 and fixed costs of $15,000. Based on this information, the budgeted amounts of fixed and variable costs for 15,000 units would be:

Answer 1

Answer:

Total fixed cost= 15,000

Total variable cost= $96,300

Explanation:

Giving the following information:

Based on a predicted level of production and sales of 12,000 units.

The variable costs= $77,000

The fixed costs= $15,000

The fixed costs, in the relevant range, remain the same. We need to calculate the unitary variable cost:

Unitary variable cost= 77,000/12,000= $6.42 per unit

Now, we can calculate the total cost of 15,000 units.

Total fixed cost= 15,000

Total variable cost= 6.42*15,000= $96,300

Total cost= $111,300