Question

Calculated variable cost per unit of $1.40 High level of activity: 2,500 units and $5,300 total cost The low level of activity was 1,000 units. Total cost at the low level of activity equals

Answer 1

The total cost at low level of activity is $3200

Step-by-step explanation:

The total cost is made up of both fixed and variable costs.

To calculate the fixed cost, we need to deduct the total variable cost from the total cost. We have complete information for high level of activity to calculate fixed cost.

Fixed cost = 5300- (1.4 * 2500) = 1800

Total cost = Fixed cost + variable cost

Total cost at low level = 1800 + 1.4 * 1000 = $3200