T Company currently has an activity level of 4,000 units and its total variable cost is...
T Company currently has an activity level of 4,000 units and its total variable cost is $20,000 and its total fixed cost is $30,000. The firm is increasing its activity level of 5,000 units.
1. At this new level compute the total variable cost.
2.compute the total fixed cost.
3.compute the total cost.
4.compute the average variable cost per unit.
5.compute the average fixed cost per unit.
6.compute the average total cost per unit.
Homework Answers
Solution
| Requirement | ||
| 1 | Total variable cost | $ 25,000.00 |
| 2 | The total fixed cost. | $ 30,000.00 |
| 3 | The total cost. | $ 55,000.00 |
| 4 | The average variable cost per unit. | $ 5.00 |
| 5 | The average fixed cost per unit. | $ 6.00 |
| 6 | The average total cost per unit. | $ 11.00 |
Working
| Requirement | |||
| 1 | Total variable cost | $ 25,000.00 | [20000/4000 x 5000] |
| 2 | The total fixed cost. | $ 30,000.00 | 30000 , fixed cost remains same in totality |
| 3 | The total cost. | $ 55,000.00 | [25000+30000] |
| 4 | The average variable cost per unit. | $ 5.00 | [25000/5000] |
| 5 | The average fixed cost per unit. | $ 6.00 | [30000/5000] |
| 6 | The average total cost per unit. | $ 11.00 | [55000/5000] |
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