Asked by Banaz Fetah on Jul 21, 2024
Verified
A business incurs the following costs per unit: Labor $5/unit;Materials $3/unit and rent $5000/month.If the firm produces 1000 units a month,the total variable costs equals
A) $5,000
B) $8,000
C) $13,000
D) $10,000
Variable Costs
Expenses that vary directly with the level of production or sales volume, such as materials and labor.
Labor
Human effort, whether physical or mental, contributed to the production of goods and services.
Materials
The physical components used in the production of goods and services.
- Determine the aggregate variable costs by multiplying the unit variable costs by the level of production.
Verified Answer
AJ
Armani Jeana'eJul 23, 2024
Final Answer :
B
Explanation :
Variable cost per unit = Labor cost + Material cost = $5 + $3 = $8
Total variable costs for 1000 units = 1000 units x $8/unit = $8000. Therefore, the best choice is B.
Total variable costs for 1000 units = 1000 units x $8/unit = $8000. Therefore, the best choice is B.
Learning Objectives
- Determine the aggregate variable costs by multiplying the unit variable costs by the level of production.