Mixture of variable and fixed components


Processing costs in the billing department of Alfaro Company are a mixture of variable and fixed components. Records indicate that average unit processing costs are $0.50 per account processed at an activity level of 32,000 accounts. When only 22,000 accounts are processed, the total cost of processing is $12,500. Given these data, at a budgeted level of 25,000 accounts:

a) Processing costs are expected to total $8,750

b) Fixed processing costs are expected to be $10,400

c) The variable processing costs are expected to be $0.35 per account processed

d) Processing costs are expected to total $13,000

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Accounting Basics: Mixture of variable and fixed components
Reference No:- TGS086208

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