Anthony Company's highest point of total cost was $75,000 in June. Their point of lowest cost was $50,000 in December. The company makes a single product. Production volume in June was 13,000 units; production volume in December was 8,000 units. What is the variable cost per unit?

Question

Quizplus · Accepted Answer

To find the variable cost per unit, we need to calculate the difference in total cost between the two points and divide by the difference in production volume:

Variable cost per unit = (Total cost at highest point - Total cost at lowest point) / (Production volume at highest point - Production volume at lowest point)

Variable cost per unit = ($75,000 - $50,000) / (13,000 - 8,000)

Variable cost per unit = $25,000 / 5,000

Variable cost per unit = $5.00 per unit

Therefore, the best choice is C, $5.00 per unit.

Anthony Company's Highest Point of Total Cost Was $75,000 in June