Homework Answers
Total cost = Variable cost + Fixed Cost
Let, Variable cost = 271,000 units*x
Hence, $205,000 = (271,000*x)+$85000
$120,000 = 271,000*x
Hence, x = $120,000/271,000 = $0.4428
Therefore, Total Variable cost at level of 280,000 units = $0.4428*280,000
= $123,985
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