Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $28,000 after deducting variable costs of $77,000 and fixed costs of $15,000. Based on this information, the budgeted amounts of fixed and variable costs for 15,000 units would be:

Question

Business

Eden Kirby

27 June, 04:57

Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $28,000 after deducting variable costs of $77,000 and fixed costs of $15,000. Based on this information, the budgeted amounts of fixed and variable costs for 15,000 units would be:

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Mario Lutz · Answer 1

Total fixed cost = 15,000

Total variable cost = $96,300

Explanation:

Giving the following information:

Based on a predicted level of production and sales of 12,000 units.

The variable costs = $77,000

The fixed costs = $15,000

The fixed costs, in the relevant range, remain the same. We need to calculate the unitary variable cost:

Unitary variable cost = 77,000/12,000 = $6.42 per unit

Now, we can calculate the total cost of 15,000 units.

Total fixed cost = 15,000

Total variable cost = 6.42*15,000 = $96,300

Total cost = $111,300