Question

Wu Company incurred $117,000 of fixed cost and $132,600 of variable cost when 3,400 units of product were made and sold. If the company's volume increases to 3,900 units, the total cost per unit will be____________.

Answer 1

Answer:

If the company's volume increases to 3,900 units, the total cost per unit will be $69 per unit

Explanation:

Variable cost per unit = variable cost/3,400 = $132,600/3,400 = $39

If the company's volume increases to 3,900 units:

Total Variable cost = Variable cost per unit x 3,900 = $39 x 3,900 = $152,100

Total fixed cost will not change = $117,000

Total cost = Total Variable cost + Total fixed cost = $152,100 + $117,000 = $269,100

The total cost per unit = Total cost/3,900 = $269,100/3,900 = $69 per unit.