Question

The total cost incurred by Winton company can be classified into two costs: Cost # 1 and Cost # 2.

	Units sold
	50	100	150	200
Cost #1	$300 per unit	$150 per unit	$100 per unit	$75 per unit
Cost #2	$2 per unit	$2 per unit	$2 per unit	$ 2 per unit

In the next month, Winton is planning to sell 300 units.

1) The fixed cost for Winton Company equals $

2) The unit variable cost for Winton Compnay equals $

3) The expected total cost for Winton Company for next month equals $

4) If Winton can reduce the fixed cost by 2% by increasing the variable cost by 10%, the expected cost next month equals $

Answer 1

From data, it is clear that:
Cost 1: Fixed cost i.e. $15000
Cost 2: Variable cost i.e. $ 2 per unit
Req 1: Total fixed cost = $ 15,000 (50 units @300)
Req 2: The Unit Variable cost: $ 2 per unit
Req 3: Expected cost of 300 units:
Variable (300 units @2)			600
Fixed			15000
Total cost			15600
Req 4:
The expected Cost of 300 Units:
Variable (300 units @ 2+ 10%)			660
Fixed ($ 15000-2%)			14700
Total expected cost			15360