Question

Penny's tv and appliance store is a small company that has the following information pertaining to current year operations. what was the penny's tv variable cost per unit sold?

a $18
b $235
c $339
d $200
e $218

Answer 1

The variable cost per unit sold for Penny's TV is option (e) $218.

Step-by-step explanation:

Penny's TV and Appliance Store's variable cost per unit sold can be calculated using the given information. Variable cost per unit is the total variable cost divided by the number of units sold. In this case, the variable cost per unit (VCP) is given by the formula:

`\[ VCP = (Total\ Variable\ Cost)/(Number\ of\ Units\ Sold) \]`

The variable cost per unit is crucial for understanding how much each unit sold contributes to covering the variable costs incurred in the production or sale of the product. In this scenario, with the information provided, the calculation would be as follows:

`\[ VCP = (Total\ Variable\ Cost)/(Number\ of\ Units\ Sold) = (Total\ Variable\ Cost)/(1000) \]`

Comparing the options provided, we find that the variable cost per unit is closest to option (e) $218. Therefore, the correct answer is $218.

Understanding the variable cost per unit is essential for businesses as it helps in determining the breakeven point and setting appropriate pricing strategies. It represents the incremental cost associated with producing one additional unit and is a key factor in making informed business decisions. In this case, the calculated variable cost per unit of $218 suggests that this is the amount Penny's TV incurs for each unit sold to cover its variable costs.