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Managerial Accounting

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Moderate

Using Mixed Costs

MGRACT-JRLG11

At a volume of 10,000 units this month, Springfield Company incurs \$60,000 in factory overhead costs. Springfield's management considers factory overhead costs to be a mixed cost. An analysis of the overhead costs shows \$20,000 in fixed costs, and the remainder of the overhead costs are variable with the output. Next month, Springfield plans to increase output to 12,000 units.

Assuming that this activity is within the relevant range, what would Springfield's total overhead costs be expected to be next month if the volume is increased to 12,000 units?

A

$\$48,000$

B

$\$68,000$

C

$\$70,000$

D

$\$72,000$