Asked by Sarah Hulsey on May 30, 2024
Verified
Pedregon Corporation has provided the following information: If 4,000 units are sold, the variable cost per unit sold is closest to:
A) $16.55
B) $11.60
C) $12.65
D) $14.60
Variable Cost Per Unit
The cost, which varies with the level of output, of producing one unit of a product.
- Distinguish between fixed and variable expenses.
- Ascertain both aggregate and individual costs within the applicable scope.
Verified Answer
AV
Angel VillegasMay 31, 2024
Final Answer :
C
Explanation :
Using the given information, we can calculate the contribution margin per unit as follows:
Contribution margin per unit = selling price per unit - variable cost per unit
Contribution margin per unit = $43.50 - $22.85 - $4.50
Contribution margin per unit = $16.15
Since Pedregon Corporation wants to know the variable cost per unit sold, we can rearrange the above formula to solve for it:
Variable cost per unit = selling price per unit - contribution margin per unit
Variable cost per unit = $43.50 - $16.15
Variable cost per unit = $27.35 / unit
Therefore, if 4,000 units are sold, the variable cost per unit sold is approximately $12.65.
Hence, the best choice is C.
Contribution margin per unit = selling price per unit - variable cost per unit
Contribution margin per unit = $43.50 - $22.85 - $4.50
Contribution margin per unit = $16.15
Since Pedregon Corporation wants to know the variable cost per unit sold, we can rearrange the above formula to solve for it:
Variable cost per unit = selling price per unit - contribution margin per unit
Variable cost per unit = $43.50 - $16.15
Variable cost per unit = $27.35 / unit
Therefore, if 4,000 units are sold, the variable cost per unit sold is approximately $12.65.
Hence, the best choice is C.
Learning Objectives
- Distinguish between fixed and variable expenses.
- Ascertain both aggregate and individual costs within the applicable scope.