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.

Question

Terrence French

Business

21 July, 21:24

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.

+5

Answers (1)

Know the Answer?

Eleanor Kaufman · 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