Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and cost behaviour patterns remain unchanged, the total cost of goods manufactured will be?
A)$630,000.
B)$600,000.
C)$585,000.
D)$615,000.

Question

Quizplus · Accepted Answer

The variable cost per unit is $30 (50% of $60). Fixed costs are $300,000 (10,000 units x $60 - 10,000 units x $30). For 10,500 units, total cost = (10,500 x $30) + $300,000 = $615,000.

Last Month, When 10,000 Units of a Product Were Manufactured