Question

based on a predicted level of production and sales of 19,000 units, a company anticipates total variable costs of $58,900, fixed costs of $38,000, and income of $94,240. based on this information, the budgeted amount of fixed costs for 17,000 units would be:

Answer 1

To determine the budgeted amount of fixed costs for 17,000 units, you would need to use the high-low method.

First, calculate the variable cost per unit:

Variable cost per unit = (Total variable costs - Fixed costs) / (Level of production and sales - Fixed costs / Variable cost per unit)

Variable cost per unit = ($58,900 - $38,000) / (19,000 - $38,000 / Variable cost per unit)

Variable cost per unit = $2.60

Next, calculate the total variable costs for 17,000 units:

Total variable costs = Variable cost per unit x Level of production and sales

Total variable costs = $2.60 x 17,000

Total variable costs = $44,200

Finally, calculate the budgeted amount of fixed costs for 17,000 units:

Budgeted amount of fixed costs = Total costs - Variable costs

Budgeted amount of fixed costs = $94,240 - $44,200

Budgeted amount of fixed costs = $50,040

Therefore, the budgeted amount of fixed costs for 17,000 units would be $50,040.