Maryland Incorporated produces toys. Total manufacturing costs are $ 370 comma 000 when 60 comma 000 toys are produced. Of this amount, total variable costs are $ 130 comma 000. What are the total production costs when 105 comma 000 toys are produced? (Assume the same relevant range for both production levels.)

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Business

Adriana Ritter

25 October, 03:24

Maryland Incorporated produces toys. Total manufacturing costs are $ 370 comma 000 when 60 comma 000 toys are produced. Of this amount, total variable costs are $ 130 comma 000. What are the total production costs when 105 comma 000 toys are produced? (Assume the same relevant range for both production levels.)

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Darryl Gates · Answer 1

The total production costs when 105 comma 000 toys are produced are $467,500

Explanation:

Manufacturing or production costs are the costs which is incurred to Manufacture / produce the products being sold.

Total Manufacturing Cost = $370,000

Variable cost = $130,000

Variable cost per unit = $130,000 / 60,000 = $2.17

Total Fixed Cost = Total Manufacturing cost - Variable cost

Total Fixed Cost = $370,000 - $130,000 = $240,000

Total Production cost = Variable cost + Fixed Cost

Total Production cost = (105,000 x 2.17) + $240,000

Total Production cost = $227,500 + $240,000 = $467,500