Barredo Corporation\'s relevant range of activity is 3,000 units to 7,000 units.

Question

Barredo Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows:

If 4,000 units are sold, the variable cost per unit sold is closest to:

Average Cost per Unit Direct materials $ 6.60 Direct labor $ 3.65 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 2.80 Fixed selling expense $ 0.70 Fixed administrative expense $ 0.40 Sales commissions $ 0.50 Variable administrative expense $ 0.45

Explanation / Answer

Answer:-

Variable cost per unit = Direct material per unit+ Direct labor per unit+Variable manufacturing overhead per unit+Sales commissions per unit+Variable administrative expense per unit

=$6.60+$3.65+$1.65+$.50+$.45 = $12.85 per unit  

If 4,000 units are sold, the variable cost per unit sold is closest to $12.85 per unit.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.