Huggins Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $ 880 2 1,250 3 1,510 4 1,675 I
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Answer: Total variable costs at a level of 260,000 units would be $1,74,460.
Explanation:
Total cost at 140,000 units = $249,000 and
Fixed cost = $195,000
Number of units = 140,000
∴ Total variable cost at 140,000 = Total cost - Total fixed cost
= 249000 - 195000
= $94000
Variable cost per unit =
=
= $0.671 per unit
Hence,
Total variable costs at a level of 260,000 units would be = Variable cost per unit × Number of units
= 0.671 × 260,000
= $1,74,460