Doggie Pals produces 110,000 dog collars each month that give off a fresh scent to keep your dog smelling clean between baths. Total manufacturing costs are $200,000. Of this amount, $100,000 are variable costs. What are the total production costs when 125,000 collars are produced? (Assume both production levels are in the same relevant range.)

Question

Quizplus · Accepted Answer

To find the total production costs for 125,000 collars, we need to use the formula:

Total production costs = Fixed costs + (Variable costs per unit x Number of units)

We know that the fixed costs are $100,000 and the variable costs per unit are:

Variable cost per unit = Total variable costs / Number of units
Variable cost per unit = $100,000 / 110,000
Variable cost per unit = $0.91

Now we can plug in the numbers:

Total production costs = $100,000 + ($0.91 x 125,000)
Total production costs = $100,000 + $113,636
Total production costs = $213,636

Therefore, the total production costs for 125,000 collars is $213,636. Option C is correct.

Doggie Pals Produces 110,000 Dog Collars Each Month That Give