Variable costs depend on the number of units produced. Fixed costs are the same regardless of how many units are produced. A company has fixed monthly costs of $11,000 and variable monthly costs of $7.00 per unit. The company has $75,000 available each month to cover costs. Find the greatest number of units the company can produce each month.
A)9142 units per month
B)9146 units per month
C)9149 units per month
D)9152 units per month
E)9135 units per month

Question

Quizplus · Accepted Answer

The greatest number of units the company can produce each month is 9142 units. This is because the company has $75,000 available each month to cover costs, and the fixed monthly costs are $11,000. This leaves $64,000 to cover variable costs. The variable monthly costs are $7.00 per unit, so the company can produce 9142 units each month (64,000 / 7 = 9142.857142857143).

Variable Costs Depend on the Number of Units Produced