Bacho Corporation Reports That at an Activity Level of 5,400

question 65

Multiple Choice

Bacho Corporation reports that at an activity level of 5,400 units, its total variable cost is $416,934 and its total fixed cost is $142,560.
-What would be the total variable cost at an activity level of 5,500 units? Assume that this level of activity is within the relevant range.

• A) $424,655
• B) $559,494
• C) $416,934
• D) $145,200

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Definitions:

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.

Pro Forma Statement

A financial document that forecasts the future income, expenses, or financial position of a company under hypothetical conditions.

Variable Costs

Expenditures that vary in a direct manner with the volume of output or sales.

Straight-Line Depreciation

A mechanism for spreading the expenditure of a tangible asset over its longevity in equal annual fractions.