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output 10000 units.
material $35.000
labour $43.000
overhead $50.000
total cost $128.000.
Material cost is variable and overhead costs are fixed up to 20.000 units. labour cost includes a supervisor’s fixed salary of $11000 and the remainder is variable.What is the budget total cost for an output of 15.000 units?
$150,500
$161,500
$167,000
$192,000?Answer Is 161,500
Work it one by one…
first is material and it says its totally variable so get the cost per unit for it 35000/10000=3.5
labour it says there is a fixed and a variable element to it..we know the fixed is 11000 and we can get variable by subtracting fixed from 43000 to get 32000 and per unit would be 32000/10000=3.2
lastly the overheads it says are fixed totally up to 20000 units so nothing changes there
Now we can work for the asked units which are 15000
so material 15000*3.5=
labour 15000*3.2 + the fixed 11000
overheads doesnt change since they are fixed 50000
add them up
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