# Cooke Corporation reports that at an activity level of 7,000 units, the total variable cost is \$590,730, and the total fixed cost is \$372,750. What would be the total cost, both fixed and variable, at an activity level of 7,100 units? Assume that this level of activity is within the relevant range.

\$971,919

Explanation:

Given:

For activity level = 7,000 units

Total variable cost = \$590,730

Total fixed cost = \$372,750

Now,

Variable cost per unit =

or

Variable cost per unit =

or

Variable cost per unit = \$84.39

The fixed cost remains the same irrespective of the number of units produced

Therefore,

The total cost for activity level of 7,100 unit

= Total variable cost for 7,100 units + Total fixed cost

= Variable cost per unit  × Number of units + Total fixed cost

= ( \$84.39 × 7,100 ) + \$372,750

= \$599,169 + \$372,750

= \$971,919

## Related Questions

In July 2009, Hungary successfully issued 1 billion euros in bonds. The transaction was managed by Citigroup. Who is the issuer of the bonds? The Hungarian government Hungary Bank Citigroup What type of bonds are these? a. Government bonds b. Corporate bondsc. Treasury Bondd. Municipal Bond

a. Government bonds

Explanation:

Hungarian government is the issuer for these bonds and these are government bonds. The bond issuer is the borrower, while the bondholder or purchaser is the lender. At the maturity of the bond, bond issuers repay the bondholder the principal value.

When computing WACC, you should use the: Multiple Choice pretax yield to maturity because it considers the current market price of debt. pretax cost of debt because it is the actual rate the firm is paying its bondholders. pretax cost of debt because most corporations pay taxes at the same tax rate. aftertax cost of debt because interest is partially, if not fully, tax deductible. current yield because it is based on the current market price of debt. g

after tax cost of debt because interest is partially, if not fully, tax deductible.

Explanation:

The debt requires fixed payment in the form of interest as attached to it. Also, since it is mandatory, it is an expense and not an appropriation of profits or earnings.

Further as the tax is payed on income after providing for all expenses, that is after providing for the interest expense also, the tax expense is reduced because of reduction in profit from interest expense.

Thus, on the net effect the company's cost of debt is the payment of interest less the tax benefit.

Under what condition could a person have a lot of wealth but little income