If at a given volume total costs and fixed costs are known, the variable costs per unit may be computed as follows:
A) (Total costs - Fixed costs)/Unit volume
B) (Total costs/Unit volume) - Fixed costs
C) (Total costs × Unit volume) - (Fixed costs/Unit volume)
D) Total costs - (Fixed costs/Unit volume)

Question

Quizplus · Accepted Answer

To find the variable cost per unit, we need to subtract the fixed costs from the total costs to get the variable costs, then divide the variable costs by the unit volume. Therefore, the correct formula is (Total costs - Fixed costs)/Unit volume.

If at a Given Volume Total Costs and Fixed Costs