At Medallion Industries, variable cost per unit is budgeted to be $8.00 and ﬁxed cost per unit is budgeted to be $5.00 in a period when 4,000 units are produced.What is the expected total cost of the units produced at Medallion, if instead, production is actually 5,100 units?
A)$52,000
B)$60,800
C)$66,300
D)$40,800
E)None of these answer choices is correct.

Question

Quizplus · Accepted Answer

First, we need to calculate the total fixed cost:
Fixed Cost = Fixed Cost per Unit x Number of Units Produced
Fixed Cost = $5.00 x 4,000 = $20,000

Next, we can use the fixed and variable costs to calculate the total cost for the expected production of 4,000 units:
Total Cost = Fixed Cost + (Variable Cost per Unit x Number of Units Produced)
Total Cost = $20,000 + ($8.00 x 4,000)
Total Cost = $52,000

To calculate the total cost for the actual production of 5,100 units, we can use the same formula but substitute 5,100 for the number of units produced:
Total Cost = $20,000 + ($8.00 x 5,100)
Total Cost = $60,800

Therefore, the expected total cost for producing 5,100 units is $60,800, which is answer choice B.

At Medallion Industries, Variable Cost Per Unit Is Budgeted to Be