Question

Harris Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $181.30 per unit. Sales volume (units) 8,000 9,000 Cost of sales $ 479,200 $ 539,100 Selling and administrative costs $ 736,000 $ 765,000 The best estimate of the total variable cost per unit is:

Answer 1

Total variable cost = $88.9

Step-by-step explanation:

Given:

Selling cost = $181.30 per unit

Sales volume (units) 8,000 9,000

Cost of sales $479,200 $539,100

Selling and administrative costs $736,000 $765,000

Variable cost [cost of sales] = [539,100-479,200]/[9000-8000]

Variable cost [cost of sales] = 59.9

Variable cost [Selling and administrative cost] = [765,000-736,000]/[9000-8000 ]

Variable cost [Selling and administrative cost] = 29

Total variable cost = $59.9 + $29

Total variable cost = $88.9