The best estimate of the total variable cost per unit is:

A) $82.90
B) $128.50
C) $104.00
D) $125.00

Question

The best estimate of the total variable cost per unit is:A) $82.90B) $128.50C) $104.00D) $125.00

Adrian Paolo · Accepted Answer

Final Answer : C, Explanation :  The best estimate of the variable cost per unit can be found by dividing the total variable cost by the total units produced. In this case, we have total variable cost of $52,000 and total units produced of 500. Dividing these, we get $104 per unit. Therefore, the best choice is C. Cost of sales:Because cost of sales is a variable cost, there are several ways to compute the variable cost per unit.Here is one:Variable cost per unit = Change in cost ÷ Change in activity= ($580,300 - $497,400)÷ (7,000 units - 6,000 units)= $82,900 ÷ 1,000 units= $82.90 per unitSelling and administrative costs:Variable cost per unit = Change in cost ÷ Change in activity= ($294,700 - $273,600)÷ (7,000 units - 6,000 units)= $21,100 ÷ 1,000 units= $21.10 per unitTotal variable cost per unit = $82.90 per unit + $21.10 per unit = $104.00

The best estimate of the total variable cost per unit is:

A) $82.90
B) $128.50
C) $104.00
D) $125.00

Definitions

Learning Objectives

Learning Objectives

Related questions