assume a company incurs 100,000 for total variable costs and 150000 for total fixed costs to...

assume a company incurs 100,000 for total variable costs and 150000 for total fixed costs to produce 10000 units. what would the total cost be to produce 12000 units?

Expert Solution

Total costs	10000 units	12000 units
Variable costs	100000	120000
Fixed costs	150000	150000
Total cost	250000	270000

Total cost be to produce 12000 units=(12000*10)+150000=
270000

Total cost Per unit	10000 units	12000 units
Variable costs	10	10.00
Fixed costs	15	12.50
Total cost	25	22.50

Total cost be to produce 12000 units=
12000*22.5=	270000

Variable costs remain constant per unit of production ,but the total variable costs vary in direct proportion to the total no. of units produced.

here, at the rate of $100000/10000 units = $ 10 per unit produced.

Fixed costs remain fixed over a certain range of production volume, but per unit fixed cost decreases as more & more no.of units are produced.

here, the total is fixed at $ 150000--- at 10000 units level, per unit fixed cost is $ 150000/10000 units = $ 15 & at 12000 units production level,per unit fixed cost is $ 150000/12000 units = $ 12.5

ekkarill92 answered 2 years ago

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