At Dwight Incorporated, total fixed and variable costs are $420,000 at a production level of 130,000 units. The company has total fixed costs of $225,000. The variable cost per unit at 200,000 units is
A)$1.50
B)$1.73
C)$3.23
D)$0.98

Question

Quizplus · Accepted Answer

The variable cost per unit can be calculated by first finding the total variable costs and then dividing by the number of units. Total variable costs are the total costs minus the fixed costs, which is $420,000 - $225,000 = $195,000. The variable cost per unit at 130,000 units is $195,000 / 130,000 = $1.50. Since variable cost per unit remains constant regardless of the number of units, it will also be $1.50 at 200,000 units.

At Dwight Incorporated, Total Fixed and Variable Costs Are $420,000