Total costs for Locke & Company at 140,000 units are $289,000, while total fixed costs are $165,000. The total variable costs at a level of 280,000 units would be (Round intermediate calculations to the nearest cent and the final answer to the nearest dollar.)O A. $249,200B. $330,000C. $578,000O D. $144,500

Question
Asked Oct 13, 2019
Total costs for Locke & Company at 140,000 units are $289,000, while total fixed costs are $165,000. The total variable costs at a level of 280,000 units would be (Round intermediate calculations to the nearest cent and the final answer to the nearest dollar.)
O A. $249,200
B. $330,000
C. $578,000
O D. $144,500
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Total costs for Locke & Company at 140,000 units are $289,000, while total fixed costs are $165,000. The total variable costs at a level of 280,000 units would be (Round intermediate calculations to the nearest cent and the final answer to the nearest dollar.) O A. $249,200 B. $330,000 C. $578,000 O D. $144,500

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Step 1

Cost incurred to produce and sell a product consist of 2 components, variable cost, and fixed cost.

Variable cost is the cost that changes with the change in production levels. It is directly proportional to the units produced.

Fixed cost is the other indirect cost incurred by the business. These are fixed in nature and do not change with the change in production level.

Cost Equation
Total Cost Fixed Cost +(Variable cost per unit* no of units)
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Cost Equation Total Cost Fixed Cost +(Variable cost per unit* no of units)

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Step 2

Given Information:

Number of Units = 140,000

Total Cost = $289,000

Fixed Cost = $165,000

Therefore, Variable Cost per unit
Total Cost Fixed Cost (Variable cost per unit * no of units)
289,000 165,000 ( VC* 140000)
VC* 140000 289000 165000
VC 124000 140000
VC per Unit $0.89 per unit
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Therefore, Variable Cost per unit Total Cost Fixed Cost (Variable cost per unit * no of units) 289,000 165,000 ( VC* 140000) VC* 140000 289000 165000 VC 124000 140000 VC per Unit $0.89 per unit

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Step 3

Computation of Variable co...

Number of Units 280,000
Variable Cost per unit = $0.89 per unit
Total Variable Cost 280,000*0.89
$249,200
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Number of Units 280,000 Variable Cost per unit = $0.89 per unit Total Variable Cost 280,000*0.89 $249,200

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