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?

Question

Business

Rodgers

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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Answers (1)

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Elias Berger · Answer 1

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.