Total costs are $80 000 when 8000 units are made. Of this amount, variable costs are $48 000. What are the total costs when 10 000 units are produced?
A) $ 92 000
B) $ 98 000
C) $100 000
D) $108 000

Question

Quizplus · Accepted Answer

The total costs consist of fixed costs and variable costs. The fixed costs can be calculated by subtracting the variable costs from the total costs at 8000 units: $80,000 - $48,000 = $32,000. Since fixed costs do not change with the level of production, they remain at $32,000. The variable cost per unit is $48,000 / 8000 units = $6 per unit. For 10,000 units, the variable costs would be 10,000 units * $6 = $60,000. Therefore, the total costs at 10,000 units would be fixed costs ($32,000) + variable costs ($60,000) = $92,000.

Total Costs Are $80 000 When 8000 Units Are Made