Variable costs per unit are as follows:
Raw materials $2.15
Direct labor $1.45
Fixed costs are $5,000 per month
If the company produces 4,000 units in the month of March their total costs will be:
A)$14,400
B)$19,400
C)$13,600
D)$18,000

Question

Quizplus · Accepted Answer

The total variable costs per unit are $2.15 (raw materials) + $1.45 (direct labor) = $3.60. For 4,000 units, the total variable costs are 4,000 * $3.60 = $14,400. Adding the fixed costs of $5,000 gives a total cost of $14,400 + $5,000 = $19,400.

Variable Costs Per Unit Are as Follows