Business A data Units produced - 1000 Utilities- $10,000 Rent - $15,000 Indirect

Question

Business A data
Units produced - 1000 Utilities- $10,000 Rent - $15,000 Indirect labor - $13,000
Units produced - 1500 Utilities - $12,500 Rent - $15,000 Indirect labor - $15,600

Business B data
Units produced - 2000 Utilities - $24,250 Rent - $21,000 Indirect labor - $22,000
Units produced - 8,000 Utilities - $66,250 Rent - 21,000 Indirect labor - $88,000

1. Calculate the total cost formula for each business
2. If business A produces 1,300 units, what would his total costs be?
3. If business B produces 9,000 units, what would his total costs be?

Explanation / Answer

1. Total cost for A = Utilities+Rent+Indirect labor = $38,000 Total cost for B = Utilities+Rent+Indirect labor = $43,100 2.Total cost for A = (Utilities+Rent+Indirect labor)*(1300/1000) = $49,400 3.Total cost for B = (Utilities+Rent+Indirect labor)*(9000/1500) = $258,600

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