Isondo's TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2015 operations.
$$\begin{array} { l r }
\text { Sales (1,200 televisions) } & \$ 1,200,000 \
\text { Cost of goods sold } & 540,000 \
\text { Store manager's salary per year } & 108,000 \
\text { Operating costs per year } & 216,000 \
\text { Advertising and promotion per year } & 24,000 \
\text { Commissions ( } 3 \% \text { of sales) } & 36,000
\end{array}$$
-What was the variable cost per unit sold for 2015?
A) $30
B) $480
C) $770
D) $450

Question

Isondo's TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2015 operations.
 $$\begin{array} { l r } 
\text { Sales (1,200 televisions) } & \$ 1,200,000 \
\text { Cost of goods sold } & 540,000 \
\text { Store manager's salary per year } & 108,000 \
\text { Operating costs per year } & 216,000 \
\text { Advertising and promotion per year } & 24,000 \
\text { Commissions ( } 3 \% \text { of sales) } & 36,000
\end{array}$$
-What was the variable cost per unit sold for 2015?
A) $30
B) $480
C) $770
D) $450

Quizplus · Accepted Answer

The variable costs include the cost of goods sold and commissions. The cost of goods sold is $540,000, and the commissions are 3% of sales, which is $36,000. The total variable costs are $540,000 + $36,000 = $576,000. Dividing this by the number of televisions sold (1,200) gives a variable cost per unit of $480.

Isondo's TV and Appliance Store Is a Small Company That