Question

Third World Gamer Inc. manufactures components for computer games within a relevant range of 500,000 to 1,000,000 disks per year. Within this range, the following partially completed manufacturing cost schedule has been prepared:

Components produced 500,000 750,000 1,000,000
Total costs:
Total variable costs $600,000 (d) (j)
Total fixed costs 600,000 (e) (k)
Total costs $1,200,000 (f) (l)
Cost per unit:
Variable cost per unit (a) (g) (m)
Fixed cost per unit (b) (h) (n)
Total cost per unit (c) (i) (o)

Complete the cost schedule above. Round costs per unit to the nearest cent.

Answer 1

Third World Gamer Inc.

Cost Schedule

Components produced 500,000 750,000 1,000,000

Total costs:

Total variable costs $600,000 900,000 1,200,000

Total fixed costs 600,000 600,000 600,000

Total costs $1,200,000 $1,500,000 $1,800,000

Cost per unit:

Variable cost per unit $1.20 $1.20 $1.20

Fixed cost per unit $1.20 $0.80 $0.60

Total cost per unit $2.40 $2.00 $1.80

Step-by-step explanation:

a) Data and Calculations:

Components produced 500,000 750,000 1,000,000

Total costs:

Total variable costs $600,000 (d) (j)

Total fixed costs 600,000 (e) (k)

Total costs $1,200,000 (f) (l)

Cost per unit:

Variable cost per unit (a) (g) (m)

Fixed cost per unit (b) (h) (n)

Total cost per unit (c) (i) (o)

Variable cost per unit = $1.20 ($600,000/500,000)