Question

At Dwight​ Incorporated, total fixed and variable costs are​ $420,000 at a production level of​ 130,000 units. The company has total fixed costs of​ $225,000. The variable cost per unit at​ 200,000 units is ______.

Answer 1

The variable cost per unit at the 200,000 units amounts to $300,000.

Step-by-step explanation:

Computing the variable cost is as:

Total fixed and variable cost = Fixed cost + Variable cost

$420,000 = $225,000 + Variable cost

Variable cost = $420,000 - $225,000

Variable cost = $195,000

Now,

we will compute the variable cost per unit which is as follows:

Variable cost per unit = Variable Cost / Units

= $195,000 / 130,000

= $1.5

Therefore, the variable cost per unit is $1.5

So, for 200,000 units it will be:

= Variable cost per unit × Units

= $1.5 × 200,000

= $300,000

Answer 2

$1.5

Step-by-step explanation:

Variable costs are the expenses that change with the production level. They increase as output increase and decrease as production decline.

Fixed cost remains constant throughout the period.

For Dwight: Total fixed and variable costs are $420,000 at 130,000 production levels. If fixed costs is $225,000, then the variable cost will be

=$ 420,000- $225,000

=$195,000

Variable cost at 130,000 units are $195,000

total cost divided by units produced

variable cost per units = 195,000/130,000

=$1.5

At 200,000 units fixed will remain at $225,000 but variable cost rate will be $1.5