Answered: a. Fixed, $300,000; variable, $246,000…

a. Fixed, $300,000; variable, $246,000 b. Fixed, $250,000; variable, $205,000 c. Fixed, $300,000; variable, $205,000 d. Fixed, $250,000; variable, $246,000 e. Fixed, $300,000; variable, $300,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A company predicts its production and sales will be 24,000 units. At that level of activity, its fixed costs are budgeted at $300,000, and its variable costs are budgeted at $246,000. If its activity level declines to 20,000 units, what will be its budgeted fixed costs and its variable costs?

a. Fixed, $300,000; variable, $246,000
b. Fixed, $250,000; variable, $205,000
c. Fixed, $300,000; variable, $205,000
d. Fixed, $250,000; variable, $246,000
e. Fixed, $300,000; variable, $300,000

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