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18 July, 12:39

Total fixed costs for Taylor Incorporated are $260,000. Total costs, including both fixed and variable, are $500,000 if 156,000 units are produced. The variable cost per unit is

A) $4.87/unit.

B) $1.54/unit.

C) $3.21/unit.

D) $1.67/unit.

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Answers (1)
  1. 18 July, 14:25
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    B) $1.54/unit.

    Explanation:

    Let's look at what we have;

    Total Cost = $ 500,000; Fixed Cost = $ 260,000

    Therefore, the Variable Cost will be = $500,000 - $260,000

    = $ 240,000

    Number of Units = 156,000 Units

    Variable cost per unit = Total Variable Cost / Number of Units

    = $ 240,000 / 156,000 Units

    = $ 1.538 Per Unit

    If we round it of to two decimal places =

    The correct answer is B. $ 1.54 / Unit.
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