Anthony Company has fixed costs of $32,000 per month.Highest production volume during the year was in January when 140,000 units were produced,85,000 units were sold and total costs of $640,000 were incurred.In June,the company produced only 55,000 units.What was the total cost incurred in June?

Question

Quizplus · Accepted Answer

To calculate the total cost incurred in June, we need to find the variable cost per unit. To do that, we can use the high-low method with the information given.
Total cost in January = Fixed cost + Variable cost * Production volume
$640,000 = $32,000 + Variable cost * 140,000
Variable cost = ($640,000 - $32,000) / 140,000 = $4.34 per unit
Therefore, the total cost incurred in June is:
Total cost in June = Fixed cost + Variable cost * Production volume
Total cost in June = $32,000 + $4.34 * 55,000 = $270,700
Therefore, the answer is D.

Anthony Company Has Fixed Costs of $32,000 Per Month