Wu Company incurred $44,200 of fixed cost and $54,600 of variable cost when 2,100 units of...

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Question

Wu Company incurred $44,200 of fixed cost and $54,600 of variable cost when 2,100 units of product were made and sold. If the

Answer 1

Answer #1

Given:- Fixed cost = $44,200; Variable cost = $54,600 for 2,100 units

Required:- Total Cost per unit when the volume doubles (i.e 4200 units)

Total cost per unit when volume is 2100 units

=(Variable+Fixed cost)/ 2100

=(54,600+44,200)/2100

= $47.05 per unit

Variable cost per unit = $54,600/2100 = $26 per unit

Total cost per unit when volume is 4,200 units

=($26 x 4,200 + 44,200) / 4,200

= $36.52 per unit

$\therefore$ When volume doubles, the total cost per unit will decrease ($47.05 - $36.52 = $10.53)

Last option is correct.

Answer 2

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