For ABC company, variable cost per unit is budgeted to be $8.00 and fixed cost p

Question

For ABC company, variable cost per unit is budgeted to be $8.00 and fixed cost per unit is budgeted to be $5.00 in a period when 4,000 units are to be produced. If production is actually 5,100 units, what is the expected total cost of the units produced? Complete the following table: Number of Units: 4,000 5,100 Total Variable Costs Total Fixed Costs Total Costs For ABC company, variable cost per unit is budgeted to be $8.00 and fixed cost per unit is budgeted to be $5.00 in a period when 4,000 units are to be produced. If production is actually 5,100 units, what is the expected total cost of the units produced? Complete the following table: Number of Units: 4,000 5,100 Total Variable Costs Total Fixed Costs Total Costs

Explanation / Answer

Solution:

The variable cost per unit is directly proportional to the production.

However, the total fixed cost would remain the same for a given period.

Budget Actual Particulars ($) ($) Number of units          4,000              5,100 Total Variable Costs        32,000            40,800 Total Fixed Costs        20,000            20,000 Total Costs        52,000            60,800

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