Question

Rock Company produces a variety of pieces of clothing. The following information describes the activity and costs for the pants department. All production workers are paid hourly and move between departments (labor costs are avoidable). 2,000 pairs of pants 2,500 pairs of pants Fabric Direct Labor $ 6,300 $ 10,000 $ 7,875 $ 12,500 Rent on the equipment $ 3,500 $ 3,500 Total Product Costs $ 19,800 $ 23,875 What is the variable cost per pair of pants? A. $8.15 B.$3.15 C. $9.55 D. $9.90

Answer 1

love of Rent on equipment is same respective production level. So it is fined cost. Then, Fabric and Direct labor are variable lost .. per unit 2000 units 2500 units Particulars Fabric - 3.15 5.00 6,300 10,000 7,875 12,500 Direct labor [ 8.15 | 16,300 20,375

Alternatively Variable Cost per unit Difference in Cost Difference in Quantity $ 23,875 - 19,800 2500 - 2000 = $$8.15]