Question

Organize, incorporated has only variable costs and fixed costs. a review of the company's records disclosed that when 200,000 units were produced, fixed manufacturing costs amounted to $1,600,000 and the cost per unit manufactured totaled $16. on the basis of this information, how much cost would the firm anticipate at an activity level of 210,000 units? multiple choice $3,280,000 $3,267,000 $3,259,000 $3,200,000 none of the answers is correct

Answer 1

The firm should anticipate a cost of $3,200,000 at an activity level of 210,000 units, considering their fixed costs and calculated variable costs per unit.

Step-by-step explanation:

The anticipated cost at an activity level of 210,000 units is $3,200,000. This is calculated by adding the fixed manufacturing costs which remain the same regardless of the level of production, to the variable costs which fluctuate based on the number of units produced. Since we know the fixed costs ($1,600,000) and the total cost per unit manufactured at 200,000 units ($16), we can calculate the variable cost per unit and then estimate the total cost for 210,000 units. With a $16 total cost per unit and fixed costs amounting to $8 per unit ($1,600,000 / 200,000 units),

we get a variable cost of $8 per unit. When producing 210,000 units, variable costs would be $8 multiplied by 210,000 units, plus the fixed costs of $1,600,000, yielding a total anticipated cost of $3,200,000.