LO 2.2Total costs for ABC Distributing are $250,000 when the activity level is 10,000 units. If variable costs are $5 per unit, what are their fixed costs?

$240,000

$200,000

$260,000

Their fixed costs cannot be determined from the information presented.

Question

Ishaan Wiggins

Business

10 February, 03:54

LO 2.2Total costs for ABC Distributing are $250,000 when the activity level is 10,000 units. If variable costs are $5 per unit, what are their fixed costs?

$240,000

$200,000

$260,000

Their fixed costs cannot be determined from the information presented.

+3

Answers (1)

Know the Answer?

Melvin Watts · Answer 1

Option (B) is correct.

Explanation:

Given that,

Total costs for ABC Distributing = $250,000

Activity level = 10,000 units

Variable costs are $5 per unit

Therefore, the fixed cost is calculated as follows:

Total cost = Variable cost + Fixed cost

$250,000 = (10,000 * $5 per unit) + Fixed cost

Fixed cost = $250,000 - $50,000

= $200,000

LO 2.2Total costs for ABC Distributing are $250,000 when the activity level is 10,000 units. If variable costs are $5 per unit, what are their fixed costs?$240,000$200,000$260,000Their fixed costs cannot be determined from the information presented.

LO 2.2Total costs for ABC Distributing are $250,000 when the activity level is 10,000 units. If variable costs are $5 per unit, what are their fixed costs?

$240,000

$200,000

$260,000

Their fixed costs cannot be determined from the information presented.