Question

In​ 2011, the fixed costs of a company were​ $500,000, and its variable costs equaled​ $150,000. In​ 2010, the company made an annual profit of​ $200,000. It has been predicted​ that, despite a steady​ growth, the​ company's variable costs will likely equal​ $300,000 by 2013. The total costs of the company in 2011 were​ ________.

Answer 1

$650,000

Step-by-step explanation:

The total cost of a company may be grouped into fixed and variable cost. The fixed cost remains constant at a given range of activity levels while the variable cost increases proportionately as the level of activities.

The total variable cost is the product of the unit variable cost and the number of units produced.

Hence, total cost in 2011

= $500,000 + $150,000

= $650,000