Question

At a production level of 5,280 units, a project has total costs of $150,000. The variable cost per unit is $23.12. Assume the firm can increase production by 750 units without increasing its fixed costs. What will the total costs be if 6,000 units are produced?

Answer 1

Answer:

$166,646.4

Explanation:

Quantity=5,280 units

Total cost=$150,000

Variable cost per unit=$23.12

Total variable cost=$23.12 × 5,280

=$122,073.6

Total cost=Total fixed cost + Total variable cost

Total fixed cost= Total cost - Total variable cost

=$150,000 - $122.073.6

=$27,926.4

If production is increased to 6,000 units at a constant fixed cost, find the total cost

Total fixed cost =$27,926.4

Total variable cost=$23.12 × 6,000

=$138,720

Total cost= Total fixed cost + Total variable cost

=$27,926.4 + $138,720

=$166,646.4