Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and cost behavior patterns remain unchanged the:A. total variable cost will remain unchanged. B. fixed costs will increase in total. C. variable cost per unit will increase. D. total cost per unit will decrease.

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Business

Koen Mahoney

17 April, 16:21

Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and cost behavior patterns remain unchanged the:A. total variable cost will remain unchanged. B. fixed costs will increase in total. C. variable cost per unit will increase. D. total cost per unit will decrease.

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Answers (1)

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Gerardo Hobbs · Answer 1

Instructions are listed below.

Explanation:

Giving the following information:

10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs.

Total cost = 10,000*60 = 600,000

Variable cost = 60*0.5 = 30

Total variable cost = 30*10,000 = 300,000

Total fixed cost = 300,00

A. total variable cost will remain unchanged. False: The total variable cost varies according to production.

B. fixed costs will increase in total. False: fixed costs remain the same in relevant ranges.

C. variable cost per unit will increase. False: in unitary levels, variable cost remains constant. It only changes when computed the totality.

D. The total cost per unit will decrease. True: because of the fixed costs gets divided by a larger amount of units.

Total variable cost = 10,500*30 = 315,000

fixed costs = 300,000

Total cost = 615,000

Unitary cost = 615,000/10,500 = $58.57