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14 July, 18:06

Based on predicted production of 23,000 units, a company anticipates $414,000 of fixed costs and $362,250 of variable costs. The flexible budget amounts of fixed and variable costs for 21,000 units are (Do not round intermediate calculations) : Multiple Choice $330,750 fixed and $414,000 variable. $414,000 fixed and $330,750 variable. $414,000 fixed and $362,250 variable. $378,000 fixed and $330,750 variable. $378,000 fixed and $362,250 variable.

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  1. 14 July, 19:57
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    The correct option is a. the variable cost is $330,750 and fixed cost is $414,000.

    Explanation:

    For computing the correct figures of variable cost and fixed cost for 21,000 units, first we have to calculate the variable cost per unit.

    So,

    Variable cost per unit = Total variable cost : Number of units

    = $362,250 : 23,000

    = $15.75 per unit

    SO, variable cost for 21,000 units = Number of units * per unit price

    = 21,000 * $15.75

    = $330,750

    Hence, the variable cost for 21,000 units is $330,750

    Since the fixed cost remained fixed whether production level is increased or not. So, fixed cost would be $414,000

    Therefore, the correct option is a. the variable cost is $330,750 and fixed cost is $414,000.
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