Separating fixed and variable costs from total costs Steps:

• Equation for June: FC + 8,000v = 76,000, where FC is June fixed costs and v is variable cost per unit.
• Equation for July: (FC + 1,000) + 10,000v = 86,000.
• Subtract June equation from July: 1,000 + 2,000v = 10,000, so 2,000v = 9,000 and v = 4.5.
• July fixed costs = 86,000 - (10,000 × 4.5) = 86,000 - 45,000 = 41,000. Why C is correct:
• Matches the formula for fixed costs: total costs minus (units × variable cost per unit) for July. Why the others are wrong:
• A: Underestimates by ignoring most variable and fixed components.
• B: Results from incorrectly assuming no fixed cost increase or wrong v.
• D: Far too low, possibly confusing with variable cost alone. Final answer: C