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?

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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 1 year ago

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