Question

Harrison Carpets incurred the following costs for March when 3,000 square feet of carpet were produced and sold:

•………$18,500 for nylon thread used on carpet
•………$5,000 for scotch guard for carpet
•………$7,200 for jute backing to reinforce the carpet
•………$6,800 for glue to be used in the manufacturing process
•………$13,000 for insurance (half for administrative activities, half for production activities)
•………$9,000 for production employees’ wages
•………$6,500 for rent and utilities in the factory

How much are total variable costs if 3,500 square feet of carpet are produced and sold in April?

$46,500

$77,000

$54,250

$43,750

Answer 1

Variable costs = nylon thread used on carpet + scotch guard for carpet + just backing to reinforce the carpet + glue to be used in the manufacturing process + production employees' wages

Variable costs = 18500 + 5000 + 7200 + 6800 + 9000 = $46,500

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