Maryland Incorporated produces toys. Total manufacturing costs are $360,000 when 50,000 toys are produced. Of this amount, total variable costs are $140,000. What are the total production costs when 85,000 toys are produced? (Assume the same relevant range for both production levels.)

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First, calculate the fixed costs by subtracting total variable costs from total manufacturing costs at the initial production level: $360,000 - $140,000 = $220,000. These fixed costs remain constant regardless of the number of units produced. Next, calculate the variable cost per unit: $140,000 / 50,000 units = $2.80 per unit. For 85,000 toys, the total variable costs are 85,000 units * $2.80 = $238,000. Add the fixed costs to get the total production costs for 85,000 toys: $238,000 + $220,000 = $458,000.

Maryland Incorporated Produces Toys