Huntsman Company's variable selling and administrative expenses are $48,000 at a production level of 6,000 units.If the production level is 8,000 units,what are the variable selling administrative expenses?
A) $48,000
B) $56,000
C) $64,000
D) $80,000

Question

Quizplus · Accepted Answer

Since the variable selling and administrative expenses are variable in nature and depend on the production level. In this case, the production level has increased from 6,000 to 8,000 units. Therefore, the variable selling and administrative expenses will increase proportionately. Using the formula of proportionality, we can calculate the new variable selling and administrative expenses as follows:
New variable selling and administrative expenses = (New production level / Old production level) * Old variable selling and administrative expenses
= (8,000 / 6,000) * 48,000
= 64,000
Thus, the variable selling and administrative expenses at a production level of 8,000 units will be $64,000.

Huntsman Company's Variable Selling and Administrative Expenses Are $48,000 at a Production