A graph of a flexible budget formula reflects fixed costs of $30,000 per month and total costs of $90,000 at a volume of 6,000 units.Assuming the relevant range is 1,000 to 12,000 units,the graph would reflect total monthly costs at 10,000 units of what dollar amount?

Question

Quizplus · Accepted Answer

The flexible budget formula includes fixed costs and variable costs. Fixed costs are $30,000. At 6,000 units, total costs are $90,000, meaning variable costs are $60,000 for 6,000 units, or $10 per unit. At 10,000 units, variable costs are $100,000 (10,000 units x $10/unit). Total costs are $130,000 ($30,000 fixed + $100,000 variable).

A Graph of a Flexible Budget Formula Reflects Fixed Costs