Question

The company's ( $ 48 ) per unit selling price is what percentage above its variable cost per unit?

(a) 20%
(b) 25%
(c) 33.33%
(d) 40%

Answer 1

The company's selling price is 50% above its variable cost per unit.

Step-by-step explanation:

The question asks what percentage above the variable cost per unit the company's selling price is. To find this percentage, we can use the formula for percentage increase: ((new value - old value) / old value) x 100. The variable cost per unit is $48, and we can calculate the selling price as follows:

Selling price = Variable cost per unit + Profit per unit

Profit per unit = Selling price - Variable cost per unit

Substituting the given values:

Profit per unit = $72 - $48 = $24

Using the percentage increase formula:

((selling price - variable cost per unit) / variable cost per unit) x 100 = (($72 - $48) / $48) x 100 = 50%.

Therefore, the company's selling price is 50% above its variable cost per unit.