00:01
Hello students, here is a question.
00:03
Company budget its total production cost of 220 ,000 for 75 ,000 units of output and 275 ,000 for 100 ,000 units of output.
00:13
Since additional facility are needed to produce 100 ,000 units, fixed cost are budgeted at 20 % more than 75 ,000 units.
00:22
What is the budgeted variable as per your output? so, we have four options given here.
00:27
We have to choose the right option.
00:29
Let us start solving this.
00:31
So, we can take the fixed cost of overall production expenses.
00:36
So, the total production expenses for 75 ,000 units is 220.
00:40
So, x is equal to fixed cost.
00:45
Total manufacturing cost minus fixed expenses is total manufacturing cost minus fixed expenses will be 220 ,000 minus x.
01:08
So, total production of expenses for 100 ,000 units are 275 ,000.
01:18
The fixed costs are 1 .2 times higher compared to 75 ,000 units.
01:24
So, total production cost will be fixed cost, sorry, total production cost minus fixed cost.
01:38
So, that will be 275 ,000 minus 1 .2 x is equal to variable cost.
01:49
So, we now construct a proportion of determining x.
01:55
So, now to determine an x, 75 ,000 units of variable cost is equal to, variable cost is equal to 100 ,000 units of variable cost is equal to 75 ,000 units of variable cost...