Sleep Time produces mattresses.Each mattress has a variable cost of $260, fixed costs of $56,000 per month, and a unit selling price of $500.If the company produces and sells 400 mattresses in February, how much is the unit cost per mattress?
A)$260
B)$400
C)$240
D)$100

Question

Quizplus · Accepted Answer

The unit cost per mattress includes both the variable cost and a portion of the fixed costs. The variable cost per mattress is $260. The fixed costs are $56,000 per month. If they produce and sell 400 mattresses, the fixed cost per mattress is $56,000 / 400 = $140. Therefore, the total cost per mattress is $260 (variable cost) + $140 (fixed cost per mattress) = $400.

Sleep Time Produces Mattresses