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2 December, 04:32

Based on predicted production of 24,200 units, a company anticipates $220,000 of fixed costs and $435,600 of variable costs. If the company actually produces 18,900 units, what are the flexible budget amounts of fixed and variable costs?

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  1. 2 December, 05:02
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    Variable cost = $340,200

    Fixed cost = $220,000

    Explanation:

    Given that,

    At Predicted production = 24,200 units,

    Fixed costs = $220,000

    Variable costs = $435,600

    Per unit variable cost:

    = Variable costs : No. of units produced

    = $435,600 : 24,200

    = $18 per unit

    Total cost at 24,200 units,

    = Variable costs + Fixed cost

    = $435,600 + $220,000

    = $655,600

    Total cost at 18,900 units,

    = Variable costs + Fixed cost

    = ($18 * 18,900) + $220,000

    = $340,200 + $220,000

    = $560,200

    Note: Fixed cost does not changes with the change in the output level.
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