Pericloud Company had utilities cost of $50,000 at an output level of 10,000 units.The utilities cost was a mixed cost, and the fixed portion was $14,000.What would the estimate of total utilities cost be at an output level of 20,000 units?
A) $25,000
B) $45,000
C) $86,000
D) $105,000

Question

Quizplus · Accepted Answer

Total Cost = Total Fixed Cost + (Variable Rate × Units of Output)
Therefore, Variable rate = (Total cost - Total fixed cost) / Units of output
Variable rate = ($50,000 - $14,000) / 10,000 units = $36,000 / 10,000 units = $3.60
Total cost at 20,000 units = (20,000 units × $3.60) + $14,000 = $86,000

Pericloud Company Had Utilities Cost of $50,000 at an Output