During 20x5, Medallion Industries anticipates production of 20,000 units, budgeted variable costs of $85,000, and budgeted ﬁxed costs of $45,000.If 15,000 units are actually produced, what is the expected total cost?
A)$130,000
B)$97,500
C)$108,750
D)$118,750
E)None of these answer choices is correct.

Question

Quizplus · Accepted Answer

First, we need to calculate the total budgeted cost per unit:
Budgeted variable cost per unit = $85,000/20,000 units = $4.25 per unit
Budgeted fixed cost per unit = $45,000/20,000 units = $2.25 per unit
Total budgeted cost per unit = $4.25 + $2.25 = $6.50 per unit

Next, we can use the total budgeted cost per unit to calculate the expected total cost for producing 15,000 units:
Expected total cost = Total budgeted cost per unit x Number of units produced
Expected total cost = $6.50 x 15,000 units
Expected total cost = $97,500

Therefore, the best choice is (C) $108,750.

During 20x5, Medallion Industries Anticipates Production of 20,000 Units, Budgeted