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Total costs are $180,000 when 10,000 units are produced; of this amount, variable costs are $64,000.
What are the total costs when 13,000 units are produced?
a. $199,200.
b.$214,800.
c.$234,000.
d. Some other amount.
e. Total costs cannot be calculated based on the information presented.

Respuesta :

Answer:

Option (a) is correct.

Explanation:

At production level of 10,000 units,

Total cost  = $180,000

Variable costs = $64,000

Fixed cost = Total cost - Variable cost

                 = $180,000 - $64,000

                 = $116,000

Therefore,

Variable cost per unit = Variable cost ÷ No. of units

                                    = $64,000 ÷ 10,000

                                    = $6.4

Therefore, at the production level of 13,000 units,

Total costs:

= Fixed cost + Variable cost

= $116,000 + ($6.4 × 13,000)

= $116,000 + $83,200

= $199,200

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