Hinrichs Corporation reports that at an activity level of 2,400 units, its total variable cost is $174,504 and its total fixed cost is $55,080. Required:For the activity level of 2,700 units, compute: (a) the total variable cost; (b) the total fixed cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost per unit; and (f) the average total cost per unit. Assume that this activity level is within the relevant range.
What will be an ideal response?
Variable cost = $174,504 ÷ 2,400 units = $72.71 per unit
Activity level | $ | 2,700 |
Total cost: | ||
Variable cost (a) [2,700 units × $72.71 per unit] | 196,317 | |
Fixed cost (b) | 55,080 | |
Total (c) | $ | 251,397 |
Cost per unit: | ||
Variable cost (d) | $ | 72.71 |
Fixed cost (e) [$55,080 ÷ 2,700 units] | 20.40 | |
Total (f) | $ | 93.11 |
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