Maddie noticed that many students on campus had t-shirts and sweatshirts with Greek organization letters or club names on them. Recognizing that there was a huge market for this attire, Maddie rented a store front and a silk screening machine to get into the t-shirt business. Maddie's rent is $1,000 a month, including utilities. The silk screen machine leases for $300 a month. Maddie can buy blank t-shirts for $6 each and sweatshirts for $10 each. Maddie calculated the cost of materials for the silk screening at $2 per unit. Considering only the figures presented above, what is the variable cost for a t-shirt Maddie silk screens?
A) $8 a unit
B) $6 a unit
C) $10 a unit
D) $4 a unit

Question

Quizplus · Accepted Answer

The variable cost for a t-shirt includes the cost of the blank t-shirt ($6) and the cost of materials for silk screening ($2), totaling $8 per unit. Fixed costs like rent and the lease for the silk screen machine are not included in the calculation of variable cost per unit.

Maddie Noticed That Many Students on Campus Had T-Shirts and Sweatshirts