The best estimate of the total variable cost per unit is:
A)$131.80
B)$53.10
C)$66.40
D)$120.90

Question

Quizplus · Accepted Answer

The best estimate of the total variable cost per unit is equal to the change in total cost divided by the change in output. Using the data provided, the change in total cost between 12,000 and 8,000 units is ($739,200 - $460,800) = $278,400. The change in output is (12,000 - 8,000) = 4,000 units. Therefore, the total variable cost per unit is $278,400 / 4,000 = $69.60. However, this is based on cents, and not whole dollars, so the closest estimate is $66.40 (C).

The Best Estimate of the Total Variable Cost Per Unit