George Company has a relevant range of 150,000 units to 400,000 units. The company has total fixed costs of $527,000. Total fixed and variable costs are $622,500 at a production level of 176,000 units. The variable cost per unit at 350,000 units is
A)$2.99
B)$0.27
C)$0.54
D)$3.54

Question

Quizplus · Accepted Answer

First, we need to find the variable cost per unit using the information given.
Total cost = fixed cost + variable cost
At a production level of 176,000 units:
$622,500 = $527,000 + (176,000 x variable cost per unit)
Variable cost per unit = ($622,500 - $527,000) / 176,000
Variable cost per unit = $0.54
Next, we need to find the total variable cost at a production level of 350,000 units:
Total variable cost = 350,000 x $0.54
Total variable cost = $189,000
Therefore, the variable cost per unit at a production level of 350,000 units is $0.54. Answer choice C is the correct answer.

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