During May, Mayer Company's total fixed costs were $5,000 and variable costs were $7,000 when 500 units were produced.How much is total cost for June if 600 units are produced?

Question

Quizplus · Accepted Answer

Total cost includes both fixed and variable costs. Fixed costs remain the same regardless of the number of units produced, so they will still be $5,000 in June. Variable costs, however, change with the level of production. If $7,000 is the variable cost for 500 units, then for each unit, the variable cost is $7,000 / 500 = $14. For 600 units, the variable cost will be 600 * $14 = $8,400. Adding this to the fixed costs of $5,000 gives a total cost of $13,400 for June.

During May, Mayer Company's Total Fixed Costs Were $5,000 and Variable