Venus Inc. has fixed costs of $300,000. Total costs, both fixed and variable, are $450,000 when 30,000 units are produced. Calculate the total costs if the volume increases to 60,000 units.

Question

Quizplus · Accepted Answer

We can start by finding the variable costs per unit:
Total cost = Fixed cost + Variable cost * Quantity
$450,000 = $300,000 + Variable cost * 30,000
Variable cost = ($450,000 - $300,000) / 30,000
Variable cost = $5 per unit

To find the total cost at 60,000 units:
Total cost = Fixed cost + Variable cost * Quantity
Total cost = $300,000 + $5 * 60,000
Total cost = $600,000

Venus Inc Has Fixed Costs of $300,000