Asked by Ingrid Maguina on May 09, 2024
Verified
Given the following information:
Variable cost per unit = $5
July fixed cost per unit = $7
Units sold and produced in July = 28,000
What is the total estimated cost for August if 30,000 units are projected to be produced and sold?
Variable Cost
An expense that fluctuates with the level of output or sales volume, such as the cost of raw materials used in a product's manufacture.
Fixed Cost
Costs that do not vary with the volume of production or sales, remaining constant over a specified range of activity and period of time, such as rent or salaries.
Units Sold
The total number of a product that a company sells within a particular period, indicating the volume of business activity.
- Determine the operating earnings by evaluating diverse levels of manufacturing and selling activities.
- Understand how cost-volume-profit (CVP) analysis aids in decision making.
Verified Answer
Total cost at 30,000 units: $196,000 + ($5 × 30,000 units) = $346,000
Learning Objectives
- Determine the operating earnings by evaluating diverse levels of manufacturing and selling activities.
- Understand how cost-volume-profit (CVP) analysis aids in decision making.
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