A project has earnings before interest and taxes of $24,900, ﬁxed costs of $48,700, a selling price of $16 a unit, and a sales quantity of 24,500 units per year. Annual depreciation is $14,600. What is
The variable cost per unit?
A) $12.40
B) $12.50
C) $12.60
D) $12.70
E) $12.80

Question

Quizplus · Accepted Answer

The variable cost per unit can be calculated using the formula: Variable Cost per Unit = (Total Revenue - Fixed Costs - EBIT - Depreciation) / Sales Quantity. Total Revenue = Selling Price * Sales Quantity = $16 * 24,500 = $392,000. Variable Cost per Unit = ($392,000 - $48,700 - $24,900 - $14,600) / 24,500 = $12.40.

A Project Has Earnings Before Interest and Taxes of $24,900