Based on a predicted level of production and sales of 16,000 units, a company an

Question

Based on a predicted level of production and sales of 16,000 units, a company anticipates reporting operating income of $18,000 after deducting variable costs of $80,000 and fixed costs of $14,000.

$14,000 of fixed costs and $95,000 of variable costs.

$14,000 of fixed costs and $89,000 of variable costs.

$16,625 of fixed costs and $95,000 of variable costs.

$16,625 of fixed costs and $80,000 of variable costs.

$14,000 of fixed costs and $80,000 of variable costs.

Based on a predicted level of production and sales of 16,000 units, a company anticipates reporting operating income of $18,000 after deducting variable costs of $80,000 and fixed costs of $14,000.

Based on this information, the budgeted amounts of fixed and variable costs for 19,000 units would be:

Explanation / Answer

Answer: $14,000 of fixed costs and $95,000 of variable costs

Explanation:

Variable cost for 16000 units = $80000

Variable cost per unit = $80000 / 16000 units = $ 5 / unit

Fixed cost is assumed to reamin same as no additional information is given regarding the change of it in relation to a change in the activity level.

Budgeted variable cost for 19000 units = 19000 units x $ 5 / unit = $95000

Budgeted fixed cost = $14000

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