Question

Assume a scattergraph shows $500 at no activity and $2440 at an activity level of 1000 units. The variable cost per unit is O $4.88 O $2.44 O $1.94 O $1.22. Save for later

Answer 1

A variable cost is a cost that varried in proportion to production output. Variable costs increase or decrease depending on production volume, they rise as production increases and fall as production decreases. Exapmle - Material Cost, Packong charges
A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold. Example - Rent, Salary

In this question,
Cost at no activity = $ 500
So it is the fixed cost, that is the cost irrespective of level of activity. Fixed cost will incure at zero level of activity also.

Cost at 1000 units = $ 2440
Less:Fixed Cost = $ 500
Total Variable Cost= $ 1940
Variable Cost per unit = total variable cost / number of unit produced
       = 1940/1000 = $ 1.94