Assume your company sell 1,000 widgets at a variable cost of $5 per widget, and $5,000 per month in fixed costs. Using the relevant range assumption, how much would you add to your variable costs if you sell 5,000 widgets.?

Question

Mathematics

Reggie

25 February, 06:43

Assume your company sell 1,000 widgets at a variable cost of $5 per widget, and $5,000 per month in fixed costs. Using the relevant range assumption, how much would you add to your variable costs if you sell 5,000 widgets.?

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Rhodes · Answer 1

Step-by-step explanation:

It is given that a company sell 1,000 widgets.

Variable cost = $5 per widget

Fixed cost = $5,000 per month

Using the relevant range assumption we need to find the increase in variable costs if you sell 5,000 widgets.

Variable cost 1,000 widgets = 1,000*5 = $5,000

Variable cost 5,000 widgets = 5,000*5 = $25,000

Increase in widgets = $25,000 - $5,000 = $20,000

Therefore, we need to add $20,000 in variable cost, if we sell 5,000 widgets