Oerther Corporation reports that at an activity level of 5,000 units, its total variable cost is $131,750 and its total fixed cost is $31,200. What would be the total variable cost at an activity level of 5,200 units? Assume that this level of activity is within the relevant range. Select one: a. $137,020 b. $131,750 c. $162,950 d. $32,448

a. $137,020

Explanation:

The computation of the total variable cost for 5,200 activity level is shown below:

But before that first we have to find out the variable cost per unit which is

= Total variable cost  ÷ given activity level

= $131,750 ÷ 5,000 units

= $26.35

Now the variable cost is

= Variable cost per unit × expected activity level

= $26.35 × 5,200 units

= $137,020

We simply applied the above formulas

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