16 This Question 2 pts 16 of 27 4 complete This Quiz 55 pt

16) This Question: 2 pts 16 of 27 (4 complete) ? | This Quiz: 55 pts possible The manager at Screaming Trees has been trying to calculate the portion of the company\'s overhead expenses that is fixed and the portion that is variable. Over the past twelve months, the number of yards of mulch processed was highest in July, when the total monthly overhead costs totaled $33,000 for 35,000 yards of mulch processed. The lowest number of yards of mulch processed in the last twelve months occurred in October, when total overhead costs were $26,000 for 26,000 yards of mulch processed. What was the variable cost per yard? O A. $1.00 B. $1.29 O c. $0.94 D. $0.78

Solution

Ans. (D) $0.78

Variable cost per yard = Change in total cost / ( High Yard - Low Yard )

= 7000 / (35000-26000)

= 7000/9000

= $0.78

Overhead cost in July = $33,000

Overhead cost in oct. $26,000

Change in Cost = 33,000-26000 = 7,000

High Yard = 35,000 yard

Low Yard = 26,000 yard