In june, ace manufacturing plant produced 100 units of propane canisters for sale. the total variable costs were $5,000 and the fixed costs for the plant amounted to $3,000. how much is the unit variable cost for canisters if 120 canisters are produced?

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20 January, 05:22

In june, ace manufacturing plant produced 100 units of propane canisters for sale. the total variable costs were $5,000 and the fixed costs for the plant amounted to $3,000. how much is the unit variable cost for canisters if 120 canisters are produced?

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Belinda Osborne · Answer 1

Calculation of the unit variable cost for canisters:

Unit Variable cost remains same irrespective of the level of the production units. In the given case we are told that in June, ace manufacturing plant produced 100 units of propane canisters for sale and the total variable costs were $5,000. It means the Unit Variable Cost is $5,000 / 100 Units = $50 per unit.

Hence, the unit variable cost shall be $50 per unit at the level of 120 canisters also.