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Organize, Inc. has only variable costs and fixed costs. A review of the company's records disclosed that when 200,000 units were produced, fixed manufacturing costs amounted to $800,000 and the cost per unit manufactured totaled $11. On the basis of this information, how much cost would the firm anticipate at an activity level of 205,000 units?

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Answer:

Total cost= $3,055,000

Explanation:

Giving the following information:

A review of the company's records disclosed that when 200,000 units were produced, fixed manufacturing costs amounted to $800,000 and the cost per unit manufactured totaled $11.

We have no reason to believe that fixed costs will increase.

Total cost= total variable cost + fixed costs

Total cost= 11*205,000 + 800,000= $3,055,000

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