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

Business

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