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:
 11eaa3fe_33cf_faac_908b_3157b141ca79_TB2461_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:
 11eaa3fe_33d0_21bd_908b_4f24c97053d1_TB2461_00 Total fixed cost = $0 + $340,200 = $340,200

Gambino Corporation Is a Wholesaler That Sells a Single Product