Question 5

Aaron's chairs is in the process of preparing a production cost budget for August. Actual costs in July for 120 chairs were:

Materials cost: 4,860

Labor Cost 2,930

Rent 1,500

Depreciation 2,500

Other fixed costs 3,200

Materials and labor are the only variable costs. If production and sales are budgeted to change to 140 chairs in August, how much is the expected total variable cost on the August budget?