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

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.