Callander Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $151.60 per unit.
-The best estimate of the total variable cost per unit is:
A)$141.00
B)$80.10
C)$69.30
D)$132.30

Question

Callander Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $151.60 per unit.  
-The best estimate of the total variable cost per unit is:
A)$141.00 
B)$80.10 
C)$69.30 
D)$132.30

Quizplus · Accepted Answer

Cost of sales:
Because cost of sales is a variable cost,there are several ways to compute the variable cost per unit.Here is one:
Variable cost per unit = Change in cost F1F1F1S1F1F1F10 Change in activity
= ($485,100 - $415,800)F1F1F1S1F1F1F10 (7,000 units - 6,000 units)
= $69,300 F1F1F1S1F1F1F10 1000 units
= $69.30 per unit
Selling and administrative costs:
Variable cost per unit = Change in cost F1F1F1S1F1F1F10 Change in activity
= ($441,000 - $430,200)F1F1F1S1F1F1F10 (7,000 units - 6,000 units)
= $10,800 F1F1F1S1F1F1F10 1000 units
= $10.80 per unit
Total cost per unit = $69.30 per unit + $10.80 per unit = $80.10

Callander Corporation Is a Wholesaler That Sells a Single Product