At a production level of 11,200 units a project has total costs of $138,000. The variable cost per unit is $9.84. What is the amount of the total fixed costs if the production level is increased to 14,000 units? The firm currently has sufficient fixed assets to reach this level of production.
A) $25,183
B) $27,792
C) $29,416
D) $29,987
E) $31,008

Question

Quizplus · Accepted Answer

$27,792To find the total fixed costs, first calculate the total variable costs at the initial production level (11,200 units) by multiplying the variable cost per unit ($9.84) by the number of units (11,200), which equals $110,208. Subtract this from the total costs at that production level ($138,000) to find the fixed costs: $138,000 - $110,208 = $27,792. Fixed costs do not change with the level of production, so the total fixed costs remain $27,792 even if production increases to 14,000 units.

At a Production Level of 11,200 Units a Project Has