Use this information for Swan Company to answer the questions that follow.

Swan Company produces a product at a total cost of $43 per unit. Of this amount, $8 per unit is selling and administrative costs. The total variable cost is $30 per unit, and the desired profit is $20 per unit.
-What is the activity rate for production setup?
A) $2,500 per setup
B) $833 per setup
C) $625 per setup
D) $400 per setup

Question

Use this information for Swan Company to answer the questions that follow.

Swan Company produces a product at a total cost of $43 per unit. Of this amount, $8 per unit is selling and administrative costs. The total variable cost is $30 per unit, and the desired profit is $20 per unit.
-What is the activity rate for production setup?
A) $2,500 per setup
B) $833 per setup
C) $625 per setup
D) $400 per setup

Quizplus · Accepted Answer

The total cost per unit is $43, with $30 being variable costs. This means the fixed costs (including production setup) are $13 per unit ($43 total cost - $30 variable cost). However, the question seems to lack sufficient information to directly calculate the activity rate for production setup, such as the number of setups or the proportion of the $13 that pertains to setups specifically. The provided answer (C) $625 per setup, cannot be accurately determined with the given information. My explanation previously assumed a direct calculation was possible, but without additional data regarding setups, the correct activity rate for production setup cannot be determined from the information provided.

Use This Information for Swan Company to Answer the Questions