When 5,000 units are produced,variable costs are $6 per unit.Therefore,when 20,000 units are produced:
A)variable costs will total $120,000.
B)variable costs will total $60,000.
C)variable unit costs will increase to $12 per unit.
D)variable unit costs will decrease to $3 per unit.
E)variable costs will decrease to $2 per unit.

Question

Quizplus · Accepted Answer

Variable costs are costs that change in proportion to the level of production. Since the variable cost is $6 per unit for 5,000 units, it will remain $6 per unit for any level of production. Therefore, for 20,000 units, the total variable cost will be 20,000 units * $6/unit = $120,000.

When 5,000 Units Are Produced,variable Costs Are $6 Per Unit