Answer:
$1.5
Explanation:
Variable costs are the expenses that change with the production level. They increase as output increase and decrease as production decline.
Fixed cost remains constant throughout the period.
For Dwight: Total fixed and variable costs are $420,000 at 130,000 production levels. If fixed costs is $225,000, then the variable cost will be
=$ 420,000- $225,000
=$195,000
Variable cost at 130,000 units are $195,000
total cost divided by units produced
variable cost per units = 195,000/130,000
=$1.5
At 200,000 units fixed will remain at $225,000 but variable cost rate will be $1.5
Answer:
The variable cost per unit at the 200,000 units amounts to $300,000.
Explanation:
Computing the variable cost is as:
Total fixed and variable cost = Fixed cost + Variable cost
$420,000 = $225,000 + Variable cost
Variable cost = $420,000 - $225,000
Variable cost = $195,000
Now,
we will compute the variable cost per unit which is as follows:
Variable cost per unit = Variable Cost / Units
= $195,000 / 130,000
= $1.5
Therefore, the variable cost per unit is $1.5
So, for 200,000 units it will be:
= Variable cost per unit × Units
= $1.5 × 200,000
= $300,000
