At a sales volume of 40,000 units, Lonnie Company's total fixed costs are $40,000 and total variable costs are $60,000. The relevant range is 30,000 to 50,000 units.If Lonnie were to sell 50,000 units, the total expected cost per unit would be: (Round intermediate calculations to 2 decimal places.)

Question

Quizplus · Accepted Answer

First, we need to calculate the contribution margin per unit:

Contribution margin per unit = selling price - variable cost per unit
Contribution margin per unit = ($100,000 / 40,000) - ($60,000 / 40,000)
Contribution margin per unit = $2.50 - $1.50
Contribution margin per unit = $1.00

Next, we can use the contribution margin per unit to calculate the total expected cost per unit at 50,000 units:

Total expected cost per unit = fixed cost / number of units + variable cost per unit
Total expected cost per unit = $40,000 / 50,000 + $1.50
Total expected cost per unit = $0.80 + $1.50
Total expected cost per unit = $2.30

Therefore, the best choice is B, $2.30.

At a Sales Volume of 40,000 Units, Lonnie Company's Total