1 answer

Problem 1: A. If annual operating costs (AOC) for ABC company are $400,000 per year as...

Question:

Problem 1: A. If annual operating costs (AOC) for ABC company are $400,000 per year as a fixed portion and $400 per day as a
Problem 1: A. If annual operating costs (AOC) for ABC company are $400,000 per year as a fixed portion and $400 per day as a variable portion. If the number of working days in a year is between 240 to 300. What amount AOC should be budgeted? B. If annual operating costs (AOC) for ABC company are $400,000 per year as a fixed portion and $800 per day as a variable portion. If the number of working days in a year is between 240 to 300. What amount AOC should be budgeted?

Answers

Answer to Part A:

Annual operating cost (AOC) for ABC company = Fixed operating cost + Variable operating cost

= $ 400,000 + ($ 400 per day * 270 days); where (240+300)/2 = 270 days is the average number of working days in a year

Thus, $ 508,000 of annual operating cost should be budgeted (Answer)

  

Answer to Part B:

Annual operating cost (AOC) for ABC company = Fixed operating cost + Variable operating cost

= $ 400,000 + ($ 800 per day * 270 days); where (240+300)/2 = 270 days is the average number of working days in a year

Thus, $ 616,000 of annual operating cost should be budgeted (Answer)

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