Question

Command Generators is in the process of preparing a production cost budget for August. Actual costs in July for the production of 60 generators were:

Materials cost	$	5,200
Labor cost		2,600
Rent		1,200
Depreciation		1,700
Other fixed costs		4,600
Total	$	15,300

Materials and labor are the only variable costs. If production and sales are budgeted to increase to 70 generators in August, how much is the expected total cost on the August budget?

Multiple Choice

• $17,850

• $16,600

• $9,100

• $15,300

• None of these answer choices is correct.

Answer 1

In Question Given material and labor are ONLY  variable costs that means other costs and expenses (Rent, Depreciation,Other fixed cost ) are fixed i.e remains same irrespective of production

Please refer Below attachment for Answer

The Question that materials and labor given cost are the only variable costs 1.e other costs & sepenses Fixed. arc $5200 Material cost per generators = - $86-67 60 $2606 = $4223 Labour cast per generators - 60 calculation of Expected total cost Amount (in $) Particulars No. of units =70 606 material cost (70X86.67) 3033 Labour cost (70x4333) Rest 1200 Depreciation 1700 other fixed cost 4600 16,600 Total cost