Based on a predicted level of production and sales of 22,000 units,a company anticipates total variable costs of $99,000,fixed costs of $30,000,and operating income of $36,000.Based on this information,the budgeted amount of variable costs for 20,000 units would be:
A)$99,000.
B)$90,000.
C)$66,000.
D)$30,000.
E)$150,000.

Question

Quizplus · Accepted Answer

Variable costs change in direct proportion to changes in production or sales volume. Since the variable costs for 22,000 units are $99,000, for 20,000 units (which is 2,000 units less), the costs would decrease proportionally. The calculation is ($99,000 / 22,000 units) * 20,000 units = $90,000.

Based on a Predicted Level of Production and Sales of 22,000