At a volume of 10,000 units,Company P incurs $30,000 in factory overhead costs,including $10,000 in fixed costs.Assuming that this activity is within the relevant range,if volume increases to 12,000 units,Company P would expect to incur total factory overhead costs of:
A)$36,000
B)$34,000
C)$30,000
D)$32,000

Question

Quizplus · Accepted Answer

Total cost = Fixed cost + Variable cost
$30,000 = $10,000 + Variable costs
Variable cost = $30,000 - $10,000
Variable cost = $20,000
Variable costs per unit = $20,000 F1F1F1S1F1F1F10 10,000 units = $2 per unit
Total cost = Total fixed cost + Total variable cost
= $10,000 + $2 per unit F1F1F1S1F1F1F10 12,000 units
= $10,000 + $24,000
= $34,000

At a Volume of 10,000 Units,Company P Incurs $30,000 in Factory