Final answer:
ABC Distributing's fixed costs are calculated by subtracting the total variable costs from the total costs, yielding $200,000.
Step-by-step explanation:
The fixed costs for ABC Distributing can be calculated by subtracting the total variable costs from the total costs. Since variable costs are $5 per unit and the activity level is 10,000 units, the total variable costs equal $50,000 (which is 10,000 units multiplied by $5 per unit). Subtracting this from the total costs of $250,000 gives us the fixed costs which would be $200,000.
ABC Distributing's fixed costs are $200,000. Option a) $200,000 is the correct choice.
Total costs are the sum of fixed costs and variable costs. In this case, we know that the total costs for ABC Distributing are $250,000 when the activity level is 10,000 units, and the variable costs are $5 per unit. To find the fixed costs, we need to subtract the variable costs from the total costs. So, the fixed costs would be $250,000 - (10,000 units x $5/unit) = $200,000. Therefore, the correct answer is option a. $200,000.