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Calico Joe Fabrics Sells a Single Product How Would You Best Describe Calico's Variable Cost Per Unit

Question 58

Multiple Choice

Calico Joe Fabrics sells a single product.The company estimates total fixed costs at $360,000 with demand and unit variable costs at various activity levels as follows:  Units  Demanded  Unit  Price  Total Variable  Costs 73,000$31$1,606,00083,000301,826,00093,000292,046,000103,000282,266,000113,000272,486,000\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Units } \\\text { Demanded }\end{array} & \begin{array} { c } \text { Unit } \\\text { Price }\end{array} & \begin{array} { c } \text { Total Variable } \\\text { Costs }\end{array} \\\hline 73,000 & \$ 31 & \$ 1,606,000 \\83,000 & 30 & 1,826,000 \\93,000 & 29 & 2,046,000 \\103,000 & 28 & 2,266,000 \\113,000 & 27 & 2,486,000\\\hline\end{array} How would you best describe Calico's variable cost per unit over the range shown?


A) It is constant.
B) It is increasing as volume increases.
C) It is decreasing as volume increases.
D) There is not enough information provided to determine the answer.

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