Forever Quilting is a small company that makes quilting kits priced at $120.The costs of the materials that go into each kit are $45.It costs $5 in labor to assemble a kit.The company has monthly expenses of $1,000 for rent and insurance,$200 for heat and electricity,$500 for advertising,and $4,500 for the monthly salary of its owner.Forever Quilting's unit variable cost for its kits is
A) $5.
B) $45.
C) $50.
D) $120.
E) $170.

Question

Quizplus · Accepted Answer

The unit variable cost includes the costs of materials and labor, which is $45 + $5 = $50. The monthly fixed costs such as rent, insurance, heat, electricity, advertising, and owner’s salary are not included in the unit variable cost. Therefore, the best choice is C.

Forever Quilting Is a Small Company That Makes Quilting Kits