The following data pertain to activity and costs for two months:
$\begin{array}{|l|r|r|}
\hline& \text { June } & \text { July } \
\hline \text { Activity level in units } & 10,000 & 20,000 \
\hline \text { Variable costs } & \$ 20,000 & ? \
\hline \text { Fixed costs } & 15,000 & ? \
\hline \text { Mixed costs } & 10,000 & ? \
\hline \text { Total costs } & \$ 45,000 & \$ 70,000 \
\hline
\end{array}$
Assuming that these activity levels are within the relevant range,what were the mixed costs for July?
A) $10,000.
B) $15,000.
C) $35,000.
D) $40,000.

Question

The following data pertain to activity and costs for two months:
$\begin{array}{|l|r|r|} 
\hline& \text { June } & \text { July } \
\hline \text { Activity level in units } & 10,000 & 20,000 \
\hline \text { Variable costs } & \$ 20,000 & ? \
\hline \text { Fixed costs } & 15,000 & ? \
\hline \text { Mixed costs } & 10,000 & ? \
\hline \text { Total costs } & \$ 45,000 & \$ 70,000 \
\hline
\end{array}$
Assuming that these activity levels are within the relevant range,what were the mixed costs for July?
A) $10,000.
B) $15,000.
C) $35,000.
D) $40,000.

Quizplus · Accepted Answer

Mixed costs consist of a fixed component and a variable component. Since the activity level doubled from June to July, but the mixed costs in June were $10,000, the fixed component of the mixed costs remains the same, and the variable component would increase proportionally with the activity level. Given that total costs in June were $45,000 and in July were $70,000, and considering that fixed costs do not change with activity level, the increase in total costs is due to the increase in variable and mixed costs. Since variable costs would double (as they vary directly with activity level), and fixed costs remain constant, the increase in mixed costs must account for the remaining difference. The correct calculation involves determining the variable and fixed components of the mixed costs, but with the information provided, we infer that the mixed costs must increase but not double, making $15,000 the most logical choice given the options and the nature of mixed costs.

The Following Data Pertain to Activity and Costs for Two