Answer (D) is correct . McFadden expects to ship 9,600 pounds of product at a rate of $0.50 per pound for a total of $4,800. Add this variable cost to the $16,000 of fixed costs to arrive at a total of $20,800 expected shipping costs for the year.
Answer (A) is incorrect because The amount of $4,800 is only the variable portion of total shipping cost.
Answer (B) is incorrect because The amount of $16,000 is only the fixed portion of total shipping cost.
Answer (C) is incorrect because The amount of $20,000 results from multiplying the per-pound shipping rate by the number of units, rather than the number of pounds, shipped.
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McFadden’s expected shipping costs for the coming year are
