Based on predicted production of 23,000 units, a company anticipates $414,000 of fixed costs and $362,250 of variable costs. The flexible budget amounts of fixed and variable costs for 21,000 units are (Do not round intermediate calculations) : Multiple Choice $330,750 fixed and $414,000 variable. $414,000 fixed and $330,750 variable. $414,000 fixed and $362,250 variable. $378,000 fixed and $330,750 variable. $378,000 fixed and $362,250 variable.

Question

Business

Aditya Valentine

31 July, 19:26

Based on predicted production of 23,000 units, a company anticipates $414,000 of fixed costs and $362,250 of variable costs. The flexible budget amounts of fixed and variable costs for 21,000 units are (Do not round intermediate calculations) : Multiple Choice $330,750 fixed and $414,000 variable. $414,000 fixed and $330,750 variable. $414,000 fixed and $362,250 variable. $378,000 fixed and $330,750 variable. $378,000 fixed and $362,250 variable.

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Answers (1)

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Andrew · Answer 1

The correct option is a. the variable cost is $330,750 and fixed cost is $414,000.

Explanation:

For computing the correct figures of variable cost and fixed cost for 21,000 units, first we have to calculate the variable cost per unit.

So,

Variable cost per unit = Total variable cost : Number of units

= $362,250 : 23,000

= $15.75 per unit

SO, variable cost for 21,000 units = Number of units * per unit price

= 21,000 * $15.75

= $330,750

Hence, the variable cost for 21,000 units is $330,750

Since the fixed cost remained fixed whether production level is increased or not. So, fixed cost would be $414,000

Therefore, the correct option is a. the variable cost is $330,750 and fixed cost is $414,000.