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2 February, 19:12

Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $28,000 after deducting variable costs of $77,000 and fixed costs of $15,000. Based on this information, the budgeted amounts of fixed and variable costs for 15,000 units would be:

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  1. 2 February, 19:20
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    Total fixed cost = 15,000

    Total variable cost = $96,300

    Explanation:

    Giving the following information:

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

    The variable costs = $77,000

    The fixed costs = $15,000

    The fixed costs, in the relevant range, remain the same. We need to calculate the unitary variable cost:

    Unitary variable cost = 77,000/12,000 = $6.42 per unit

    Now, we can calculate the total cost of 15,000 units.

    Total fixed cost = 15,000

    Total variable cost = 6.42*15,000 = $96,300

    Total cost = $111,300
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