M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations. Sales (1,200 televisions) $1,200,000 Cost of goods sold 540,000 Store manager's salary per year 108,000 Operating costs per year 216,000 Advertising and promotion per year 24,000 Commissions (3.0% of sales) 36,000 What was the variable cost per unit sold for 2017? A. $450 B. $770 C. $480 D. $30

Question

Clara Rice

Business

10 May, 03:50

M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations. Sales (1,200 televisions) $1,200,000 Cost of goods sold 540,000 Store manager's salary per year 108,000 Operating costs per year 216,000 Advertising and promotion per year 24,000 Commissions (3.0% of sales) 36,000 What was the variable cost per unit sold for 2017? A. $450 B. $770 C. $480 D. $30

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Answers (1)

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Simeon Hutchinson · Answer 1

C. $480

Explanation:

Answer is C.

Cost of Goods Sold = $540,000

Commission = $36,000

Total Variable Costs = Cost of Goods Sold + Commission

Total Variable Costs = $540,000 + $36,000

Total Variable Costs = $576,000

Number of units sold = 1,200

Variable Cost per unit = Total Variable Costs / Number of units sold

Variable Cost per unit = $576,000 / 1,200

Variable Cost per unit = $480

So, Variable Cost per unit sold for 2017 is $480