Pacific Parts produces a single part for sale. The part sells for $27 per unit. Fixed...
Pacific Parts produces a single part for sale. The part sells for $27 per unit. Fixed costs are $790,000 annually. Production and sales of 290,000 units annually results in profit before taxes of $1,530,000.
Required:
What is the unit variable cost?
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Homework Answers
Using the profit equation:
Profit = (P – V) × X – FC
$1,530,000 = ($27 – V) × 290,000 – $790,000
V = $5,510,000 ÷ 290,000
V = $19 per unit
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