In Year 1, variable costs per unit of output are $21 and output is 11,000 units. If variable costs are expected to increase by 50c per unit in the following year and output is expected to increase by 10%, the projected figure for total variable costs for Year 2 is:
A) $260,150
B) $6,050
C) $23,650
D) $236,500

Question

Quizplus · Accepted Answer

In Year 2, the variable cost per unit increases by 50c to $21.50. The output increases by 10% to 12,100 units. The total variable costs are calculated as $21.50 * 12,100 = $260,150.

In Year 1, Variable Costs Per Unit of Output Are