At Raines Company, total fixed and variable costs are $480,000 at a production level of 140,000 units. The company has total fixed costs of $200,000.
-If Raines Company reduces production to 180,000 units then the variable cost per unit will be
A) $1.18.
B) $1.15.
C) $2.00.
D) $1.11.

Question

Quizplus · Accepted Answer

Variable costs at 140,000 units = Total costs - Fixed costs = $480,000 - $200,000 = $280,000. Variable cost per unit = $280,000 / 140,000 = $2.00. Variable cost per unit remains constant regardless of the number of units produced.

At Raines Company, Total Fixed and Variable Costs Are $480,000