Gambarini 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 $197.80 per unit. $\begin{array}{lrr}
\text { Sales volume (units).}&6,000 & 7,000 \
\text {Cost of sales }&\$ 486,600 & \$ 567,700 \
\text {Selling and administrative costs. }&\$ 612,600 & \$ 624,400
\end{array}$ The best estimate of the total monthly fixed cost is:
A)$541,800
B)$1,192,100
C)$1,099,200
D)$1,145,650

Question

Quizplus · Accepted Answer

The fixed cost can be estimated by finding the difference in costs at different sales volumes and identifying the variable cost per unit. The variable cost per unit is the change in total cost divided by the change in units sold. Subtract the total variable cost from the total cost to find the fixed cost.

Gambarini Corporation Is a Wholesaler That Sells a Single Product