A graph of a flexible budget formula reflects fixed costs of $40,000 per month and total costs of $84,000 at a volume of 4000 units. Assuming the relevant range is 1,000 to 20,000 units, the graph would reflect total monthly costs at 8000 units of what dollar amount?
A)$128,000
B)$84,000
C)$212,000
D)$88,000

Question

Quizplus · Accepted Answer

To find the total monthly costs at 8000 units, first, calculate the variable cost per unit. The total costs at 4000 units are $84,000, which includes fixed costs of $40,000. Therefore, the total variable costs at 4000 units are $84,000 - $40,000 = $44,000. The variable cost per unit is $44,000 / 4000 = $11. To find the total costs at 8000 units, multiply the variable cost per unit by 8000 and add the fixed costs: ($11 * 8000) + $40,000 = $88,000 + $40,000 = $128,000.

A Graph of a Flexible Budget Formula Reflects Fixed Costs