Gambino Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $138.80 per unit. The best estimate of the total monthly fixed cost is:

Question

Gambino Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $138.80 per unit.  The best estimate of the total monthly fixed cost is:

Quizplus · Accepted Answer

Variable cost of sales per unit = Change in cost ÷ Change in activity
= ($430, 500 - $369, 000)÷ (7, 000 units - 6, 000 units)
= $61, 500 ÷ 1, 000 units
= $61.50 per unit
Fixed cost of sales:
 11eaa0c8_9631_5493_9cb2_513390a36f15_TB2487_00 Variable selling and administrative cost per unit = Change in cost ÷ Change in activity
= ($418, 600 - $407, 400)÷ (7, 000 units - 6, 000 units)
= $11, 200 ÷ 1, 000 units
= $11.20 per unit
Fixed cost of sales:
 11eaa0c8_9631_5494_9cb2_6b05d0915448_TB2487_00 Total fixed cost = $0 + $340, 200 = $340, 200

Gambino Corporation Is a Wholesaler That Sells a Single Product