Question

Left Hand, Inc. has fixed costs of $400,000. Total costs, both fixed and variable, are $550,000 when 40,000 units are produced. Calculate the total costs if the volume increases to 82,000 units. (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

Answer 1

$711600 ( nearest dollar)

Step-by-step explanation:

Variable Cost + Fixed Cost = Total Cost

V.C + 400,000 = 550,000

V.C = 550,000-400,000

V.C = $150,000

Variable Cost per unit = Variable Cost ÷ Number of units produced

V.C per unit = 150,000÷ 40,000

V.C per unit = $3.75 per unit ∴ $3.8

If the company produced 82,000 units the Total Cost will be as under:

Fixed Cost( it remains same despite the number of units produced it remains constant) = 400,000

Variable Cost for 82,000 units = 3.8×82000 = 311600

Total Cost = 711600