Based on a predicted level of production and sales of 12,000 units, a company an

Question

Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $32,000 after deducting variable costs of $72,000 and fixed costs of $4,000.Based on this information, the budgeted amounts of fixed and varlable costs for 15,000 units would be: Multiple Choice $5,000 of fixed costs and $72,000 of variable costs $4,000 of fixed costs and $90,000 of variable costs. $4,000 of fixed costs and $72,000 of variable costs. $5,000 of fixed costs and $90,000 of variable costs $4,000 of fixed costs and $81,000 of variable costs. Prev 4 of 35i Next>

Explanation / Answer

Fixed costs should remain fixed at $4,000

Variable costs = ($72,000/12,000 units) * 15,000 units = $90,000

Hence the correct option is B.

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