Question

A company operates with a mix of fixed and variable costs (which are not given but...

A company operates with a mix of fixed and variable costs (which are not given but you need to figure out). Under scenario A, a company needs to produce 3,000 units, calculated average cost is $3 per unit. Under Scenario B, a company needs to produce 6,000 units, its calculated average cost is $2.50.

The company's fixed costs are:

Group of answer choices

$5,000

$4,000

$2,000

$3,000

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

  • Fixed costs are costs that do not change with level of output.
  • Using a linear equation, y = mx + c, fixed costs can be found.
    • y = total cost (i.e. variable costs + fixed costs)
    • m = variable cost per unit
    • x = volume of output
    • c = fixed costs (same under both scenarios)
  • Equation (1): 3000m + c = $9000
  • Equation (2): 6000m + c = $15000
  • Subtracting (1) from (2): 3000m = $6000; i.e. m = variable cost per unit = $6000 ÷ 3000 = $2
  • Now, fixed cost: Solving equation (1) 3000 × $2 + c = $9000
    • c = fixed cost = $9000 - $6000 = $3000
  • or Solving equation (2) 6000 × $2 + c = $15000
    • c = fixed cost = $15000 - $12000 = $3000
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company operates with a mix of fixed and variable costs (which are not given but...
A company operates with a mix of fixed and variable costs (which are not given but you need to figure out). Under scenario A, a company needs to produce 3,000 units, calculated average cost is $3 per unit. Under Scenario B, a company needs to produce 6,000 units, its calculated average cost is $2.50. The company's variable costs PER UNIT are: Group of answer choices $1 $ $3 $2
In year 1 Frodo Company has variable costs of $80 per unit, total fixed costs of...
In year 1 Frodo Company has variable costs of $80 per unit, total fixed costs of $200,000, and a break-even point of 5,000 units. If the company raises the sales price per unit by $10 the following year, how many units must Frodo Company sell to break even in Year 2? A. 3,000 units B. 4,000 units C. 6,000 units D. 5,000 units
Alpha Corp reported the following: Revenues $10,000 Variable manufacturing costs ? Variable nonmanufacturing costs $ 3,000...
Alpha Corp reported the following: Revenues $10,000 Variable manufacturing costs ? Variable nonmanufacturing costs $ 3,000 Fixed manufacturing costs $ 1,000 Fixed nonmanufacturing costs ? If Alpha's contribution margin is $5,000, what would Alpha's gross margin be? Group of answer choices $7,000 $6,000 $5,000 $4,000
Metal Industries has monthly fixed costs totaling $90,000 and variable costs of $5 per unit. Each...
Metal Industries has monthly fixed costs totaling $90,000 and variable costs of $5 per unit. Each unit of product is sold for $20. Assume the company expects to sell 11,850 units of product this coming month. What is the margin of safety in units? Group of answer choices 8,850 6,600 5,850 7,350 Tech Products, Inc. has monthly fixed costs totaling $90,000 and variable costs of $5 per unit. Each unit of product is sold for $20. How many units must...
Sunland Corp. had total variable costs of $193,800, total fixed costs of $133,300, and total revenues...
Sunland Corp. had total variable costs of $193,800, total fixed costs of $133,300, and total revenues of $340,000. Compute the required sales in dollars to break even. Required sales $ Amanda Company reports the following total costs at two levels of production. Classify each cost as variable, fixed, or mixed. 5,000 Units 10,000 Units Indirect labor $ 3,000 $ 6,000 Fixed CostsMixed CostsVariable Costs Property taxes 7,000 7,000 Fixed CostsMixed CostsVariable Costs Direct labor 28,000 56,000 Fixed CostsMixed CostsVariable Costs...
1. Select the correct statement regarding fixed costs. Because they do not change, fixed costs should...
1. Select the correct statement regarding fixed costs. Because they do not change, fixed costs should be ignored in decision making. The fixed cost per unit decreases when volume increases. The fixed cost per unit increases when volume increases. 2. Rock Creek Bottling Company pays its production manager a salary of $6,000 per month. Salespersons are paid strictly on commission, at $1.50 for each case of product sold. For Rock Creek Bottling Company, the production manager's salary is an example...
E22-1.   Define and classify variable, fixed, and mixed costs. (LO 1) Bonita Company manufactures a single...
E22-1.   Define and classify variable, fixed, and mixed costs. (LO 1) Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production. Costs Incurred Production in Units 5,000 10,000 Production Costs Total Cost Cost/Unit Total Cost Cost/Unit Direct materials $8,000 $1.60 $16,000 $1.60 Direct labor ?9,500 ?1.90 ?19,000 ?1.90 Utilities ?2,000 ?0.40 ??3,300 ?0.33 Rent ?4,000 ?0.80 ??4,000 ?0.40 Maintenance ???800 ?0.16 ??1,400 ?0.14 Supervisory salaries ?1,000 ?0.20 ??1,000...
High-Low Method: 1) Surplus Company manufacturers parts for old Army Hummers. The following data is presented...
High-Low Method: 1) Surplus Company manufacturers parts for old Army Hummers. The following data is presented for the 4 weeks in June: Week 1 – 2,000 units produced, $3,000 depreciation (fixed), $1,000 indirect labor (fixed), $5,000 utilities cost (semivariable), and $4,000 factory supplies (variable). Week 2 – 3,000 units produced, $3,000 depreciation (fixed), $1,000 indirect labor (fixed), $7,000 utilities cost (semivariable), and $6,000 factory supplies (variable). Week 3 – 2,500 units produced, $3,000 depreciation (fixed), $1,000 indirect labor (fixed), $6,000...
Sales mix and break-even analysis Conley Company has fixed costs of $15,525,000. The unit selling price,...
Sales mix and break-even analysis Conley Company has fixed costs of $15,525,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit Yankee $175 $100 $75 Zoro 255 180 75 The sales mix for products Yankee and Zoro is 20% and 80%, respectively. Determine the break-even point in units of Yankee and Zoro of the overall (total) product, E. If...
RTI company’s master budget calls for production and sale of 18,000 units for $81,000; variable costs...
RTI company’s master budget calls for production and sale of 18,000 units for $81,000; variable costs of $30,600; and fixed costs of $20,000. During the most recent period, the company incurred $32,000 of variable costs and $28,000 of fixed costs to produce and sell 20,000 units for $85,000. What is the sales volume variance for operating income? Group of answer choices $3,400 favorable $64,000 unfavorable $5,600 favorable $9,000 unfavorable What is the flexible budget variance for operating income? Group of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT