Question

At a sales volume of 30,000 units, Carne Company's total fixed costs are $30,000 and total variable costs are $45,000. The relevant range is 20,000 to 40,000 units. If Carne Company were to sell 32,000 units, the total expected cost would be:

(A) $75,000
(B) $78,000
(C) $80,000
(D) $77,000

Answer 1

(B) $78,000

Step-by-step explanation:

The computation of the expected cost equals to

= Fixed cost + variable cost

where,

Fixed cost = $30,000

And, the variable cost = Variable cost × (estimated sales units ÷ given sales units)

= $45,000 × (32,000 units ÷ 30,000 units)

= $48,000

Now put these values to the above formula

So, the value would equal to

= $30,000 + $48,000

= $78,000