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.)

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