Question

Winslow, Inc., a tennis equipment manufacturer, has variable costs of $0.60 per unit of product. In August, the volume of production was 27,000 units, and units sold were 21,800. The total production costs incurred were $30,600. What are the fixed costs per month?

A) $14,400
B) $17,520
C) $3,600
D) $16,200

Answer 1

To calculate the fixed costs for Winslow, Inc., multiply the variable cost per unit by the number of units produced and subtract this from the total production costs. The result is $14,400, which is the fixed costs per month.

Step-by-step explanation:

The fixed costs for Winslow, Inc. can be determined using the information provided on variable costs and total production costs. Given that variable costs are $0.60 per unit for a production volume of 27,000 units, we calculate the total variable cost by multiplying these two values: $0.60 × 27,000 units = $16,200. Subtracting the total variable cost from the total production costs of $30,600 gives us the fixed costs: $30,600 - $16,200 = $14,400. Therefore, the fixed costs per month are $14,400, which corresponds to Answer A.