Question

Paolucci Corporation's relevant range of activity is 8,400 units to 17,000 units. When it produces and sells 12,700 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost per Unit $7.10 $4.00 $2.00 $3.60 $1.30 $0.60 $1.25 $8.50 If 11.700 units are sold, the variable cost per unit sold is closest to

Answer 1

Variable Cost per unit does not change with change in units sold or produced. Total Variable Costs changes with the level of production.

Variable Cost per unit for 11700 units sold:

Direct Material	7.10
Direct Labour	4
Variable manufacturing overhead	2
Variable Cost per Unit	$13.10