Question

Carpet Renewal dyes carpets for residential customers. The company is interested in estimating fixed and variable costs. The following data are available for the month of June when 420 carpets were dyed:

Office rent $ 1,250
Depreciation - equipment 900
Cleaning supplies 5,140
Hourly wages 11,000
Transportation (variable) 3,600
Owner’s salary 3,100
Total $24,990
Using account analysis, how much is estimated variable cost per carpet?
a. $59.50
b. $52.12
c. $47.00
d. $38.43

Answer 1

Answer: c. $47 per carpet

Step-by-step explanation:

Total variable costs are:

= Cleaning supplies + Hourly wages + Transportation

= 5,140 + 11,000 + 3,600

= $19,740

The variable cost per carpet is:

= Total variable cost / Number of carpets dyed

= 19,740 / 420

= $47 per carpet