Boyko,Inc.has fixed costs of $400,000.Total costs,both fixed and variable,are $550,000 when 40,000 units are produced.Calculate the total costs if the volume increases to 64,000 units.(Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)
A) $950,000
B) $150,000
C) $640,000
D) $550,000

Question

Quizplus · Accepted Answer

We can use the high-low method to calculate the variable cost per unit:
Variable cost per unit = (Total cost at high volume - Total cost at low volume) / (High volume - Low volume)
Variable cost per unit = ($550,000 - $400,000) / (40,000 - 0) = $3.75 per unit
Then, we can use the total cost equation to calculate the total cost at the new volume:
Total cost = Total fixed cost + (Variable cost per unit x Number of units)
Total cost = $400,000 + ($3.75 x 64,000) = $640,000
Therefore, the answer is C, $640,000.

Boyko,IncHas Fixed Costs of $400,000