Asked by Yanna Listana on Jun 10, 2024
Verified
Hinrichs Corporation reports that at an activity level of 2,400 units, its total variable cost is $174,504 and its total fixed cost is $55,080.Required:
For the activity level of 2,700 units, compute: (a) the total variable cost; (b) the total fixed cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost per unit; and (f) the average total cost per unit. Assume that this activity level is within the relevant range.
Variable Cost
Charges that fluctuate based on the quantity of output or level of sales.
Fixed Cost
Costs that remain unchanged regardless of the level of production or sales activity, such as rent, salaries, and insurance premiums.
Relevant Range
The span of activity or volume over which the assumptions about fixed and variable cost behaviors hold true for a specific business.
- Determine the variable and fixed outlays at differing levels of activity.
- Calculate the mean expense per unit for variable, fixed, and total expenditures across the appropriate scope.
Verified Answer
CA
CHRISTINE ANTONELLIJun 16, 2024
Final Answer :
Variable cost = $174,504 ÷ 2,400 units = $72.71 per unit
Learning Objectives
- Determine the variable and fixed outlays at differing levels of activity.
- Calculate the mean expense per unit for variable, fixed, and total expenditures across the appropriate scope.