DMX anticipates producing 500 license plates during his stay in a Miami jail during July. The budgeted costs for July are $5,600 with $4,200 being related to variable costs. How much will the total cost be if DMX produces 600 license plates?
A) $3,500
B) $4,200
C) $5,600
D) $6,440

Question

Quizplus · Accepted Answer

Unit variable cost = Total variable costs ÷ units produced; $4,200 ÷ 500 plates = $8.40; Total fixed costs = Total costs - Total variable costs = $5,600 - $4,200 = $1,400; Total cost (600 plates) = (Unit variable cost x plates produced) + Total fixed costs = ($8.40 x 600) + $1,400 = $6,440.

DMX Anticipates Producing 500 License Plates During His Stay in a Miami