Doggie Pals produces 100,000 dog collars each month that give off a fresh scent to keep your dog smelling clean between baths. Total manufacturing costs are $200,000. Of this amount, $150,000 are variable costs. What are the total production costs when 125,000 collars are produced? (Assume both production levels are in the same relevant range.)

A) $187,500

B) $250,000

C) $387,500

D) $237,500

Question

Avah Holloway

Business

8 November, 06:01

Doggie Pals produces 100,000 dog collars each month that give off a fresh scent to keep your dog smelling clean between baths. Total manufacturing costs are $200,000. Of this amount, $150,000 are variable costs. What are the total production costs when 125,000 collars are produced? (Assume both production levels are in the same relevant range.)

A) $187,500

B) $250,000

C) $387,500

D) $237,500

+1

Answers (1)

Know the Answer?

Dennis Salinas · Answer 1

The correct answer is D.

Explanation:

Giving the following information:

Doggie Pals produces 100,000 dog collars each month. Total manufacturing costs are $200,000. Of this amount, $150,000 are variable costs. What are the total production costs when 125,000 collars are produced.

First, we need to calculate the unitary variable cost:

Unitary VC = Total VC / units produced = 150,000/100,000 = $1.5

Total production costs = 1.5*125,000 + 50,000 = $237,500