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) None of the answers is correct.
E) Total costs cannot be calculated based on the information presented.

Question

Quizplus · Accepted Answer

The total costs consist of fixed costs and variable costs. Fixed costs remain constant regardless of the number of units produced, while variable costs change with the level of production. To find the total costs when 13,000 units are produced, first, calculate the fixed costs: Total costs at 10,000 units = $180,000, of which variable costs are $64,000, so fixed costs = $180,000 - $64,000 = $116,000. The variable cost per unit = $64,000 / 10,000 = $6.4. For 13,000 units, variable costs = 13,000 * $6.4 = $83,200. Therefore, total costs at 13,000 units = fixed costs + variable costs for 13,000 units = $116,000 + $83,200 = $199,200.

Total Costs Are $180,000 When 10,000 Units Are Produced; of This