The company conducts a sensitivity analysis using a variable cost of $8.90 per unit. The total variable costs given this estimate are:
A) $33,820
B) $34,290
C) $35,600
D) $36,400
E) $37,180

Question

Quizplus · Accepted Answer

Given a variable cost of $8.90 per unit, to find the total variable costs, we need to know the number of units. However, without the specific number of units, we can't directly calculate the total variable costs. The correct answer (C) $35,600, suggests that there was a specific number of units considered in the calculation. Assuming the total variable costs are correct at $35,600 with a variable cost of $8.90 per unit, we can reverse-engineer the number of units: $35,600 / $8.90 per unit = 4,000 units. This implies that the scenario is based on producing and selling 4,000 units.

The Company Conducts a Sensitivity Analysis Using a Variable Cost