Question

Variable cost per unit is budgeted to be $6.00 and fixed cost per unit is budgeted to be $3.00 in a period when 5,000 units are produced. If production is actually 4,500 units, what is the expected total cost of the units produced?

a)$45,000
b)$40,500
c)$43,500
d)$42,000

Answer 1

The expected total cost of the units produced is d)$42,000

Step-by-step explanation:

Total fixed cost = Fixed cost per unit x units are plan produced = $3 x 5,000 = $15,000

Total fixed cost is not change.

Production is actually 4,500 units. Variable cost per unit is budgeted to be $6.00

Total Variable cost = Variable cost per unit x units are actually produced = $6 x 4,500 = $27,000

Total cost = Total Variable cost + Total fixed cost = $27,000 + $15,000 = $42,000