What would be the competitor's prediction of total expected costs at 18,000 units?

A) $16,860
B) $26,400
C) $29,100
D) $30,000

The competitor's prediction of total expected costs at 18,000 units can be calculated as follows:
Total Variable Costs = 18,000 x $0.60 = $10,800
Total Fixed Costs = $15,000
Total Expected Costs = Total Variable Costs + Total Fixed Costs
Total Expected Costs = $10,800 + $15,000 = $25,800
Therefore, the closest option is B) $26,400.

Variable cost = Change in cost ÷ Change in activity = $6,500 ÷ 5,000 units = $1.30 per unit
Fixed cost element = Total cost - Variable cost element
= $29,000 - ($1.30 per unit × 20,000 units)= $3,000
Y = a + bX = $3,000 + ($1.30 per unit × 18,000 units)= $26,400
Reference: APP06A-Ref2
(Appendix 6A)The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: