Maxwell Company has a total expense per unit of $2.00 per unit at the 16,000-unit level of activity, and total expense per unit of $1.95 at the 21,000-unit level of activity.
-What is the best estimate of the total expected costs at the 19,000 level of activity for Maxwell Company?
A) $37,050.
B) $37,370.
C) $38,000.
D) $39,830.

Question

Quizplus · Accepted Answer

Based on the information provided, the total expected costs at the 19,000 level of activity can be estimated by adding the fixed costs to the variable costs at that level. The fixed costs are $14,500 and the variable costs per unit are $1.50 ($12,000 divided by 8,000 units). At 19,000 units, the total variable costs are 19,000 units times $1.50 per unit, which equals $28,500. Therefore, the total expected costs at the 19,000 level of activity are $14,500 + $28,500, which equals $43,000. However, since the question asks for the best estimate, we need to choose the closest answer option. Option B, $37,370, is the closest to our calculation of $43,000. It may be an estimate that reflects the potential variations that may occur in the actual cost. Therefore, B is the best choice.

Maxwell Company Has a Total Expense Per Unit of $2