Question

Total costs for Locke​ & Company at 140 comma 000 units are $ 289 comma 000​, while total fixed costs are $ 195 comma 000. The total variable costs at a level of 260 comma 000 units would be​ (Round intermediate calculations to the nearest cent and the final answer to the nearest​ dollar.)

Answer 1

Answer: Total variable costs at a level of 260,000 units would be $1,74,460.

Step-by-step explanation:

Total cost at 140,000 units = $249,000 and

Fixed cost = $195,000

Number of units = 140,000

∴ Total variable cost at 140,000 = Total cost - Total fixed cost

= 249000 - 195000

= $94000

Variable cost per unit =
`(Total\ variable\ cost)/(Number\ of\ units)`

=
`(94000)/(140000)`

= $0.671 per unit

Hence,

Total variable costs at a level of 260,000 units would be = Variable cost per unit × Number of units

= 0.671 × 260,000

= $1,74,460