XYZ Company incurred 44200 of fixed cost and 54600 of variab

XYZ Company incurred $44,200 of fixed cost and $54,600 of variable cost when 2,100 units of product were made and sold.

If the company\'s volume increases to 2,600 units (within relevant range), the total cost per unit will be:

A. $21.00.

B. $43.00.

C. $38.00.

D. $17.00.

Solution

Variable cost per unit=$54600/2100

=$26 per unit

Hence at 2600 units;total cost=Variable cost+Fixed costs

=(26*2600)+44200

=$111800

Hence total cost per unit=(=$111800/2600)

=$43.00

NOTE:Total fixed cost and variable cost per unit do not change with change in units.