Based on predicted production of 10,000 units, a company anticipates $168,000 of

Question

Based on predicted production of 10,000 units, a company anticipates $168,000 of fixed costs and $126,000 of variable costs. The flexible budget amounts of fixed and variable costs for 8,000 units are (rounded): $168,000 fixed and $126,000 variable. $168,000 fixed and $100,800 variable. $134,400 fixed and $100,800 variable. $100,800 fixed and $168,000 variable. $134,400 fixed and $126000 variable. $168,000 fixed and $126,000 variable. $168,000 fixed and $100,800 variable. $134,400 fixed and $100,800 variable. $100,800 fixed and $168,000 variable. $134,400 fixed and $126000 variable. $168,000 fixed and $126,000 variable. $168,000 fixed and $100,800 variable. $134,400 fixed and $100,800 variable. $100,800 fixed and $168,000 variable. $134,400 fixed and $126000 variable.

Explanation / Answer

The answer is $168,000 fixed and $100,800 variable.

Reasoning: the fixed costs of $168,000 remains constant irrespective of the production volume. Variable costs however will change. For 10,000 units, this is $126,000 or $12.6/unit. For 8000 units, this would be $12.6*8000=$100,800.

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