Asked by Elijah Price on Jun 30, 2024
Verified
If Lonnie were to sell 50,000 units, the total expected cost per unit would be:
A) $2.20
B) $2.30
C) $2.50
D) $2.00
Expected Cost
An estimate of the cost for a product, project, or operation that is anticipated under normal conditions.
Sell
The act of giving or handing over something in exchange for money.
- Apply the concept of relevant range in cost analysis.
Verified Answer
SB
steven bernardJul 05, 2024
Final Answer :
B
Explanation :
Variable cost per unit = Total variable cost ÷ Units = $60,000 ÷ 40,000 = $1.50 per unit
Total cost = Fixed cost + (Variable cost per unit × Units)= $40,000 + ($1.50 per unit × 50,000 units)
= $115,000
Cost per unit = $115,000 ÷ 50,000 units = $2.30 per unit
Reference: CH01-Ref32
Erkkila Inc.reports that at an activity level of 2,100 machine-hours in a month, its total variable inspection cost is $69,846 and its total fixed inspection cost is $9,072.
Total cost = Fixed cost + (Variable cost per unit × Units)= $40,000 + ($1.50 per unit × 50,000 units)
= $115,000
Cost per unit = $115,000 ÷ 50,000 units = $2.30 per unit
Reference: CH01-Ref32
Erkkila Inc.reports that at an activity level of 2,100 machine-hours in a month, its total variable inspection cost is $69,846 and its total fixed inspection cost is $9,072.
Learning Objectives
- Apply the concept of relevant range in cost analysis.
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