Question

Pericloud Company had utilities cost of $50,000 at an output level of 10,000 units. The utilities cost was a mixed cost, and the fixed portion was $14,000. What would the estimate of total utilities cost be at an output level of 20,000 units? A) $25,000. B) $45,000. C) $86,000. D) $105,000.

Answer 1

THE CORRECT OPTION IS C) $ 86000

Step-by-step explanation:

Given that fixed cost of any number of unit is $ 14,000.

So the remaining cost 10,000 unit is $ 36,000.

Now each unit will cost $ (36,000 ÷ 10,000) = $ 3.6.

∴ 20,000 units will cost a { fixed cost of $ 14,000 + varying cost of ( $3.6 * 20,000)}.

So the net effective cost = $ (14,000 + 7,2000).

= $ 86,000.