A review of Parson Corporation's accounting records found that at a volume of 90,000 units, the variable and ﬁxed cost per unit amounted to $8 and $4, respectively.On the basis of this information, what amount of total cost would Parson anticipate at a volume of 85,000 units?

Question

Quizplus · Accepted Answer

Using the given information, we can calculate the total cost at a volume of 90,000 units:

Total cost = (Variable cost per unit x Volume) + Fixed cost
Total cost = ($8 x 90,000) + $4
Total cost = $720,000 + $4
Total cost = $720,004

To find the total cost at a volume of 85,000 units, we can use the same formula:

Total cost = (Variable cost per unit x Volume) + Fixed cost
Total cost = ($8 x 85,000) + $4
Total cost = $680,000 + $4
Total cost = $680,004

Therefore, the amount of total cost that Parson Corporation would anticipate at a volume of 85,000 units is $1,040,000 (option B).

A Review of Parson Corporation's Accounting Records Found That at a Volume