Sophie Corporation recently produced and sold 100,000 units. Fixed costs at this level of activity amounted to $50,000; variable costs were $100,000. How much cost would the company anticipate if during the next period it produced and sold 102,000 units?
A) $150,000.
B) $151,000.
C) $152,000.
D) $153,000.
E) None of the answers is correct.

Question

Quizplus · Accepted Answer

The fixed costs remain constant at $50,000 regardless of the number of units produced. The variable cost per unit is $100,000 / 100,000 units = $1 per unit. For 102,000 units, variable costs would be 102,000 x $1 = $102,000. Total anticipated cost = Fixed costs + Variable costs = $50,000 + $102,000 = $152,000.

Sophie Corporation Recently Produced and Sold 100,000 Units