Adens Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows:

Average

Cost per Unit

Direct materials $ 6.25

Direct labor $ 2.80

Variable manufacturing overhead $ 1.55

Fixed manufacturing overhead $ 2.40

Fixed selling expense $ 0.50

Fixed administrative expense $ 0.40

Sales commissions $ 1.00

Variable administrative expense $ 0.50

If 5,000 units are sold, the variable cost per unit sold is closest to:

A. $13.00

B. $10.60

C. $12.10

D. $15.40

Question

Business

Roy

20 April, 02:14

Adens Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows:

Average

Cost per Unit

Direct materials $ 6.25

Direct labor $ 2.80

Variable manufacturing overhead $ 1.55

Fixed manufacturing overhead $ 2.40

Fixed selling expense $ 0.50

Fixed administrative expense $ 0.40

Sales commissions $ 1.00

Variable administrative expense $ 0.50

If 5,000 units are sold, the variable cost per unit sold is closest to:

A. $13.00

B. $10.60

C. $12.10

D. $15.40

+4

Answers (1)

Know the Answer?

Braniac · Answer 1

C. $12.10

Explanation:

The variable cost per unit is constant across the relevant range:

Direct materials $ 6.25

Direct labor $ 2.80

Variable manufacturing overhead $ 1.55

Variable Manufacturing cost: 10.6

Sales commissions $ 1.00

Variable administrative expense $ 0.50

Other Variable Cost 1.50

Total variable cost: 10.6 + 1.5 = 12.10