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Smith Corporation has variable costs equal to $5.10 per unit, fixed costs of $11,000, and total output equal to 240 units. What is the total cost?

Question

Smith Corporation has variable costs equal to 5.10perunit,fixedcostsof5.10 per unit, fixed costs of 11,000, and total output equal to 240 units. What is the total cost?

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Solution

To calculate the total cost, we need to add the fixed costs to the variable costs multiplied by the total output.

Step 1: Calculate the total variable costs Variable costs per unit = 5.10Totaloutput=240unitsTotalvariablecosts=VariablecostsperunitTotaloutputTotalvariablecosts=5.10 Total output = 240 units Total variable costs = Variable costs per unit * Total output Total variable costs = 5.10 * 240 = $1,224

Step 2: Add the fixed costs to the total variable costs Fixed costs = 11,000Totalcost=Fixedcosts+TotalvariablecostsTotalcost=11,000 Total cost = Fixed costs + Total variable costs Total cost = 11,000 + 1,224=1,224 = 12,224

So, the total cost for Smith Corporation is $12,224.

This problem has been solved

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