Nantucket Company has the following cost-volume-profit (CVP)relationships:
What is the variable cost per unit?

Question

Nantucket Company has the following cost-volume-profit (CVP)relationships: 
What is the variable cost per unit?

Quizplus · Accepted Answer

We can use the formula for CVP analysis to solve for the variable cost per unit:

Sales = (Price per unit x Units sold)

Total Costs = (Fixed costs + Variable costs)

Profit = (Sales - Total costs)

If we plug in the given information from the table, we can solve for the variable cost per unit:

$125,000 = (2,000 x ($625 - v))

$125,000 = (1,250,000 - 2,000v)

2,000v = 1,125,000

v = $562.50

Therefore, the variable cost per unit is $562.50. The best choice would be B.

Nantucket Company Has the Following Cost-Volume-Profit (CVP)relationships