Laramie, Inc., has an operating environment with considerable uncertainty. The company prepares the budget for several different volume levels. Laramie had the following budgeted data:
What are the total budgeted costs for 3,000 units?
A) $3,000
B) $55,650
C) $64,650
D) $27,000

Question

Laramie, Inc., has an operating environment with considerable uncertainty. The company prepares the budget for several different volume levels. Laramie had the following budgeted data:
 What are the total budgeted costs for 3,000 units?
A) $3,000 
B) $55,650 
C) $64,650 
D) $27,000

Quizplus · Accepted Answer

Using the high-low method, we can calculate the variable cost per unit:

Variable cost per unit = (Total cost at highest level - Total cost at lowest level) / (Highest level of activity - Lowest level of activity)
Variable cost per unit = ($82,050 - $50,550) / (4,500 - 2,500)
Variable cost per unit = $15

Using the equation method, we can calculate the total budgeted costs for 3,000 units:

Total cost = Fixed cost + (Variable cost per unit × Number of units)
Total cost = $28,500 + ($15 × 3,000)
Total cost = $64,500

Therefore, the total budgeted costs for 3,000 units is $64,500. The closest answer is C, which is the correct choice.