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If production volume increases from 10,000 to 12,500 units, total costs will increase by 20%. Ο Ο Ο Ο total costs will increa

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Answer #1

Solution:

1. Total variable cost will increase by 25%

28 . $12,555

Explanation:

1.

If production volume increases from 10,000 to 12,500 units

Total variable cost changes according to their production since that variable cost is directly linked with the volume of production

Increase in variable costs = (Difference / Initial untis ) x 100 = [(12500 - 10000) / 10000 ] x 100 = 25%

28

Total utility cost = $2400 + ($16.20 x labour hours)

Labour hours = 775

Here the variability utility cost = 16.20 x labour hours = $16.20 x 775 = $12,555

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