A company has a total cost of $100,000, with fixed costs of $40,000. What is the

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Question: A company has a total cost of $100,000, with fixed costs of $40,000. What is the variable cost if 4,000 units are produced?

Options:

$15,000
$20,000
$25,000
$30,000

Correct Answer: $25,000

Solution:

Total Cost = Fixed Costs + Variable Costs; Variable Costs = Total Cost - Fixed Costs = $100,000 - $40,000 = $60,000. Variable Cost per Unit = $60,000 / 4,000 = $15.

A company has a total cost of $100,000, with fixed costs of $40,000. What is the

Practice Questions

A company has a total cost of $100,000, with fixed costs of $40,000. What is the variable cost if 4,000 units are produced?

$15,000
$20,000
$25,000
$30,000

Questions & Step-by-Step Solutions

A company has a total cost of $100,000, with fixed costs of $40,000. What is the variable cost if 4,000 units are produced?

Step 1: Identify the total cost of the company, which is $100,000.
Step 2: Identify the fixed costs, which are $40,000.
Step 3: Use the formula for total cost: Total Cost = Fixed Costs + Variable Costs.
Step 4: Rearrange the formula to find Variable Costs: Variable Costs = Total Cost - Fixed Costs.
Step 5: Substitute the values into the formula: Variable Costs = $100,000 - $40,000.
Step 6: Calculate the variable costs: Variable Costs = $60,000.
Step 7: To find the variable cost per unit, divide the variable costs by the number of units produced: Variable Cost per Unit = $60,000 / 4,000.
Step 8: Calculate the variable cost per unit: Variable Cost per Unit = $15.

Total Cost Calculation – Understanding how total cost is composed of fixed and variable costs.
Variable Cost per Unit – Calculating the variable cost per unit produced based on total variable costs.

A company has a total cost of $100,000, with fixed costs of $40,000. What is the

What’s inside this PDF?

A company has a total cost of $100,000, with fixed costs of $40,000. What is the

Practice Questions

Questions & Step-by-Step Solutions

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