George Company has a relevant range of 150,000 units to 400,000 units. The company has total fixed costs of $525,000. Total fixed and variable costs are $612,500 at a production level of 175,000 units. The variable cost per unit at 300,000 units is
A)the same as at 175,000 units.
B)greater than at 175,000 units.
C)less than at 175,000 units.
D)dependent upon fixed costs per unit.

Question

Quizplus · Accepted Answer

Variable costs per unit remain constant within the relevant range, which includes both 175,000 and 300,000 units. Fixed costs are spread over the units produced but do not affect the variable cost per unit.

George Company Has a Relevant Range of 150,000 Units to 400,000