Homework Answers
9.
Answer: c
Total variable cost should be affected by the increase of production units, since such cost is directly linked with the volume of production.
Increase in V.C = (Difference / Initial units) × 100
= (2,000 / 8,000) × 100
= 25%
10.
Answer: d
Material cost per unit should be calculated first.
Material cost per unit = Total DM cost / Units produced
= 10,000 / 2,000
= 5
Now this is to be multiplied with 2,500 units to get the answer.
Required cost = 5 × 2,500
= 12,500
11.
Answer: d
Fixed cost is fixed in totality but variable in per-unit. It is so because the per-unit cost depends on a division to total fixed cost by the units of production.
This is the type of cost which is still there even if there is no production.
Fixed cost at 0 production = Per-unit cost × Units of production
= 9 × 20,000
= 180,000
(or)
= 6 × 30,000
= 180,000
12.
Answer: b
Opportunity cost is the best benefit foregone for pursuing the master degree.
Opportunity cost = Entry-level salary – Part-time level salary
= 30,000 – 8,000
= 22,000
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