Asked by Alexsis Oltsher on Jun 04, 2024
Verified
What would be the total variable cost at an activity level of 5,200 units? Assume that this level of activity is within the relevant range.
A) $137,020
B) $131,750
C) $162,950
D) $32,448
Variable Cost
Variable costs change in proportion to the level of business activity or production volume, such as raw materials and packaging.
Activity Level
Refers to the volume of production or operations within a specific period, influencing costs and operational capacity.
Units
The individual items or products counted for inventory, production, or sales purposes.
- Determine the overall and each unit's cost at varying production scales.
Verified Answer
= $131,750 ÷ 5,000 units
= $26.35 per unit
Total variable cost = Variable cost per unit × Total activity
= $26.35 per unit × 5,200 units
= $137,020
Learning Objectives
- Determine the overall and each unit's cost at varying production scales.
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