Shipping cost at Junk Food Imports is a mixed cost with variable and fixed components. Past records indicate total shipping cost was $18,000 for 16,000 pounds shipped and $22,500 for 22,000 pounds shipped. Assuming that this activity is within the relevant range, if the company plans to ship 18,000 pounds next month, the expected shipping cost is:

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abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2021-04-03T02:25:17+02:00

Answer:

$18,500

Explanation:

Calculation to determine what the expected shipping cost is:

First step is to calculate the Variable using this formula

Variable =Change in total cost /change in units

Let plug in the formula

Variable=(22,500-18,000)/(22,000-16,000)

Variable=$0.75 per pound

Now let calculate the expected shipping cost

Expected shipping cost=$0.75 per pound *18,000 pound

Expected shipping cost=$18,500

Therefore The Expected shipping cost is $18,500