EA 17. What is the total budgeted variable cost?

Question

BlackTom AI · Accepted Answer

Total budgeted variable cost equals budgeted units multiplied by the variable cost per unit.

Relevant concepts:
- Variable costs change in direct proportion to activity (units produced or sold); they are expressed on a per‑unit basis.
- The total budgeted variable cost is therefore: Total Variable Cost = Budgeted Activity (units) × Variable Cost per Unit.

Step‑by‑step reasoning and calculation:
1. From the budget details, the planned activity level is 7,700 units and the variable cost per unit (the sum of all variable components such as direct materials, direct labor and variable overhead per unit) is $5.00. These are the inputs used to compute total budgeted variable cost.
2. Multiply the two values:
   - Total Variable Cost = 7,700 units × $5.00/unit
   - Compute 7,700 × 5: 7,700 × 5 = (7,000 × 5) + (700 × 5) = 35,000 + 3,500 = 38,500
3. Therefore the total budgeted variable cost = $38,500.

Why this is correct:
- Because variable costs vary with output, the correct method is to multiply the per‑unit variable cost by the budgeted number of units. The arithmetic above yields $38,500, which matches the provided budget figures.
- If instead one mistakenly summed fixed costs or omitted a variable component, the result would differ; only the per‑unit variable components should be included in this multiplication.

Conclusion:
Using the budgeted activity of 7,700 units and a variable cost of $5.00 per unit produces a total budgeted variable cost of $38,500, confirming the provided answer of 38,500.

EA 17. What is the total budgeted variable cost?数值题

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