Plymouth Manufacturing produces cup holders. Total manufacturing costs are $400,000 when 40,000 holders are produced. Of this amount, total variable costs are $120,000. What are the total production costs when 60,000 holders are produced? (Assume the same relevant range for both production levels.)

Question

Quizplus · Accepted Answer

The variable cost per unit is $120,000 / 40,000 = $3. Fixed costs are $400,000 - $120,000 = $280,000. For 60,000 units, total variable costs are 60,000 * $3 = $180,000. Total costs = $280,000 (fixed) + $180,000 (variable) = $460,000.

Plymouth Manufacturing Produces Cup Holders