Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $26,000 after deducting variable costs of $72,000 and fixed costs of $10,000. Based on this information, the budgeted amounts of fixed and variable costs for 15,000 units would be:
A) $10,000 of fixed costs and $72,000 of variable costs.
B) $10,000 of fixed costs and $90,000 of variable costs.
C) $12,500 of fixed costs and $90,000 of variable costs.
D) $12,500 of fixed costs and $72,000 of variable costs.
E) $10,000 of fixed costs and $81,000 of variable costs.
B) $10,000 of fixed costs and $90,000 of variable costs.
Explanation: Fixed costs should remain fixed at $10,000
Variable costs per unit = $72,000 / 12,000 units = $6.00 per unit
Variable costs = $6.00 per unit * 15,000 units = $90,000
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