Answer:
Instructions are below.
Explanation:
Giving the following information:
Toys produced 40,000
Total variable costs= $720,000
Total fixed costs= $600,000
Total costs= $1,320,000
<u>Between the relevant range, the fixed costs remain constant.</u>
First, we need to calculate the unitary variable cost:
Unitary variable cost= total variable cost/total number of units
Unitary variable cost= 720,000/40,000= $18 per unit.
For 80,000 units:
Total variable cost= 18*80,000= 1,440,000
Fixed costs= 600,000
Total cost= $2,040,000
For 120,000 units:
Total variable cost= 18*120,000= 2,160,000
Fixed costs= 600,000
Total cost= $2,760,000