Assume 30,000 units of an input currently costing $2.00 per unit were consumed to produce 6000 outputs in the first six months of the fiscal year. How much should be budgeted for the next year assuming output remains at 1,000 units per month and a 10% price increase is expected in the first month of the budget year?

Question

Quizplus · Accepted Answer

The input cost for 12,000 units of output (1,000 units per month for 12 months) is calculated as follows: 30,000 units of input for 6,000 outputs means 5 units of input per output. For 12,000 outputs, 60,000 units of input are needed. With a 10% price increase, the cost per unit becomes $2.20. Thus, the budget is 60,000 units * $2.20 = $132,000.

Assume 30,000 Units of an Input Currently Costing $2