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A review of Parson Corporation's accounting records found that at a volume of 138,000 units, the...

A review of Parson Corporation's accounting records found that at a volume of 138,000 units, the variable and fixed cost per unit amounted to $5 and $2, respectively. On the basis of this information, what amount of total cost would Parson anticipate at a volume of 128,800 units?

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Answer #1

Total fixed costs=(2*138,000)=$276,000

Hence total cost at 128,800 units=Total fixed costs+Total variable costs

=$276,000+(5*128,800)

=$920,000.

NOTE:Total fixed costs and variable cost per unit do not change with change in units

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