Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: What was Carter Co.'s weighted average variable cost?
A) $140
B) $ 70
C) $ 64
D) $ 60

Question

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:  What was Carter Co.'s weighted average variable cost?
A) $140 
B) $ 70 
C) $ 64 
D) $ 60

Quizplus · Accepted Answer

To calculate the weighted average variable cost, we need to divide the total variable cost by the total units sold. Let's assume that the variable cost per unit for Arks is $50 and for Bins is $30. Then the total variable cost for Arks would be $50 x 14,000 = $700,000 and for Bins would be $30 x 56,000 = $1,680,000. The total units sold would be 14,000 + 56,000 = 70,000. Therefore, the weighted average variable cost would be ($700,000 + $1,680,000) / 70,000 = $64. Therefore, the best choice is C, $64.

Carter Co Sells Two Products, Arks and Bins