Question

Complete the chart, showing manufacturing cost at various levels of production for Company X

Volume (unit) 10,000 20,000 30,000 40,000

Cost A $25,000 $25,000 $25000

Cost B $25,000 $50,000 $100,000

Cost C $33,000 $48,000 $78,000

I know Cost A under Volume(unit) is $25,000, needs help on how to calculate Cost B and A.

Answer 1

• Workings

--Cost A, is apparently a FIXED COST

--Cost B, is a variable cost because:
$ 25000 / 10000 = $ 2.5
$ 50000 / 20000 = $ 2.5

--Cost C is Mixed Cost:

		Units	Cost
High Level		30,000	$                   78,000.00
Low Level		10,000	$                   33,000.00
Difference		20,000	$                   45,000.00
A	Difference in Cost		$                   45,000.00
B	Difference in units		20,000
C = A/B	Variable cost per unit		$                             2.25
Working		High Level	Low Level
A	Total Cost	$                 78,000.00	$                   33,000.00
B	Total Units	30000	10000
C	Variable cost per unit	$                           2.25	$                             2.25
D = B x C	Total Variable cost	$                 67,500.00	$                   22,500.00
E = A - D	Total Fixed Cost	$                 10,500.00	$                   10,500.00

• Answer

Volume	10,000	20,000	30,000	40,000
Cost A [Fixed Cost]	$25,000	$25,000	$25,000	$25,000
Cost B [Variable Cost]	$25,000	$50,000	$100,000	$100,000 [40000 units x $2.50]
Cost C [Mixed Cost	$33,000	$48,000	$78,000	$100,500 [$10500 + ($2.25 x 40000 units)]