The following data pertain to activity and costs for two recent months: $$\begin{array} { | l | l | l | }
\hline & \text { October } & \text { November } \
\hline \text { Activity level in units } & 5,000 & 10,000 \
\hline & & \
\hline \text { Variable costs } & \$ 10,000 & ? \
\hline \text { Fixed costs } & 30,000 & ? \
\hline \text { Mixed costs } & 20,000 & ? \
\hline \text { Total costs } & \underline { \$ 60,000 } & \$ 75,000 \
\hline
\end{array}$$ Assuming that these activity levels are within the relevant range, the mixed costs for November were?
A)$25,000.
B)$30,000.
C)$20,000.
D)$40,000.

Question

The following data pertain to activity and costs for two recent months: $$\begin{array} { | l | l | l | } 
\hline & \text { October } & \text { November } \
\hline \text { Activity level in units } & 5,000 & 10,000 \
\hline & & \
\hline \text { Variable costs } & \$ 10,000 & ? \
\hline \text { Fixed costs } & 30,000 & ? \
\hline \text { Mixed costs } & 20,000 & ? \
\hline \text { Total costs } & \underline { \$ 60,000 } & \$ 75,000 \
\hline
\end{array}$$ Assuming that these activity levels are within the relevant range, the mixed costs for November were?
A)$25,000.
B)$30,000.
C)$20,000.
D)$40,000.

Quizplus · Accepted Answer

Given that total costs in October are $60,000 and in November are $75,000, and knowing that fixed costs remain constant, we can deduce that the increase in total costs from October to November is due to variable and mixed costs. Since variable costs double as the activity level doubles (from 5,000 to 10,000 units), the variable costs for November would be $20,000 (double the $10,000 of October). With fixed costs at $30,000 (unchanged), and variable costs at $20,000 for November, the remaining $25,000 of the total $75,000 for November must be attributed to mixed costs. Therefore, the mixed costs for November were $25,000.

The Following Data Pertain to Activity and Costs for Two