Question

Bonita Industries used high-low data from June and July to determine its variable cost of $12 per unit. Additional information follows: Month Units produced Total costs June 2200 $32400 July 600 13200 If Bonita’s produces 1300 units in August, how much is its total cost expected to be?

Answer 1

Answer:

Total cost= $25,200

Explanation:

Giving the following information:

Unitary variable cost= $12

Units produced - total cost:

June: 2,200 - $32,400

July: 600 - $13,200

August= 1,600 units

First, we need to determine the fixed costs:

Fixed costs= total cost - total variable cost

June= 32,400 - 12*2,200= $6,000

July= 13,200 - 12*600= $6,000

Now, we can calculate the total cost for 1,600 units,

Total cost= 6,000 + 12*1,600= $25,200