Question

Cincinnati Manufacturing plans to sell 9,900 units. At this level of activity they report total variable cost of $919,116 and total fixed cost of $259,974. At an activity level of 10,100 units what would be total costs (both variable and fixed)?

Answer 1

Answer:

Total cost = 1,197,658‬

Explanation:

We are given with a cost an especific level of activity and we need to calculate for another:

Given the cost structure for 9,900 units:

Total cost = variable cost + fixed cost

1.179.090 =     919,116         +  259,974

We need to determinate the variable cost per unit, so we can adjust for 10,100 units

Variable cost = variable per unit x volume

919,116 = variable per unit x 9,900

Variable per unit = 919,116 / 9,900 = 92,84

Now we calculate total cost at 10,100 units

Total cost = 92,84 x 10,100 + 259,974

Total cost = 937,684‬ + 259,974

Total cost = 1,197,658‬