Question

Total costs for Locke​ & Company at 160 comma 000160,000 units are $ 299 comma 000$299,000​, while total fixed costs are $ 195 comma 000$195,000. The total variable costs at a level of 250 comma 000250,000 units would be​

Answer 1

$162,500

Step-by-step explanation:

As we know that the total cost can be found from the following formula:

Total Cost = Fixed cost + Variable Cost per unit * Total Quantity

Here the total cost for 160,000 units is $299,000 and fixed cost is $195,000. By putting values we have:

$299,000 = $195,000 + Variable Cost per unit * 160,000 units

$299,000 - $195,000 = Variable Cost per unit * 160,000 units

$104,000 / 160,000 units = Variable Cost per unit

Variable Cost per unit = $0.65

For 250,000 units,

Total Variable Cost = 250,000 units * $0.65 = $162,500