34 of 40 (17 complete) ? 1 his Questióh: 1 pt This Test: 40 pts possi The highes
ID: 2432425 • Letter: 3
Question
34 of 40 (17 complete) ? 1 his Questióh: 1 pt This Test: 40 pts possi The highest value of total cost was $760,000 in June for Horchata Beverages, Inc. Its lowest value of total cost was $530,000 in December. The company makes a single product. The production volume in June and December were 13,000 and 7,000 units, respectively. What is the fixed cost per month? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.) OA. $230,000 OB. $261,710 O c. $7,000 O D. $530,000Explanation / Answer
Answers
A
Highest Cost
$ 760,000.00
B
Lowest Cost
$ 530,000.00
C=A - B
Difference
$ 230,000.00
D
Highest Volume
13,000
E
Lowest Volume
7,000
F = D - E
Difference
6,000
G = C
Difference in Costs
$ 230,000.00
H = F
Difference in Units
6,000
I = G/H
Variable cost per unit
$ 38.33
Working
Considering Highest Volume activity
A
Units
13,000
B
Variable cost per unit
$ 38.33
C=A x B
Total Variable cost
$ 498,290.00
D
Total Cost given
$ 760,000.00
E= D - C
Fixed Cost
$ 261,710.00
Correct Answer
Option 'B': $ 261,710
A
Highest Cost
$ 760,000.00
B
Lowest Cost
$ 530,000.00
C=A - B
Difference
$ 230,000.00
D
Highest Volume
13,000
E
Lowest Volume
7,000
F = D - E
Difference
6,000
G = C
Difference in Costs
$ 230,000.00
H = F
Difference in Units
6,000
I = G/H
Variable cost per unit
$ 38.33
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