Accounting 9706 · AS & A Level · Costs and cost behaviour

Costs and cost behaviour — practice question

A business is predicting its profits at two different activity levels. When $5000$ units are sold: Combined fixed and variable costs are $20000$ Profit is $15000$ Sales revenue is $35000$ When $8000$ units are sold: Combined fixed and variable costs are $26000$ Profit is $30000$ Sales revenue is $56000$ Within the range of activity above, fixed costs and selling prices stay unchanged. What forecast profit would there be if sales were $7000$ units?

  • A$21000
  • B$25000
  • C$26000
  • D$26250

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