Maryland Incorporated produces toys. Total manufacturing costs are $ 370 comma 000 when 90 comma 000 toys are produced. Of this amount, total variable costs are $ 140 comma 000. What are the total production costs when 105 comma 000 toys are produced? (Assume the same relevant range for both production levels.)

Total production costs when 105,000 toys are produced = $393,275

Explanation:

Provided that total cost of manufacturing 90,000 toys = $370,000

Out of which variable cost = $140,000

That means fixed cost = $370,000 - $140,000 = $230,000

Now variable cost per unit = $140,000/90,000 units = $1.555

Therefore cost of producing 105,000 toys with same relevant range = $1.555 X 105,000 = $163,275 = Variable Cost

Note: Fixed cost will remain same as the range of production level is same.

Therefore fixed cost for producing 105,000 units = $230,000

Therefore total cost = $163,275 + $230,000 = $393,275