Answer:
The $18 per unit can Griffin afford to spend on variable cost per unit if production and sales equal 50,000 phones.
Explanation:
Since the net income equals to
Contribution - Fixed cost = Net income
where,
Contribution = Sales - variable cost
So, by using the above equation, the following information is given below:
Sales price = $36 per unit
Fixed cost = $450,000
Net income = $150,000
Units = 50,000 phones
By using above information, we can calculate the contribution
Contribution = Fixed cost + Net income
= $450,000 + $150,000
= $600,000
Since, variable cost is not given. So we assume variable cost per unit be X.
So,
Units = Contribution amount ÷ (Sale Price - Variable cost per unit )
50,000 phones = $600,000 ÷ ($36 - X )
($36 - X ) = $600,000 ÷ 50,000 phones
So X would be $18 per unit
Means, the variable cost is $18 per unit.
Hence, $18 per unit can Griffin afford to spend on variable cost per unit if production and sales equal 50,000 phones.
