Question

Relevant Range and Fixed and Variable Costs

Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 72,000 to 114,000 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared:

Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round all other values to the nearest dollar.

Memory chips produced	72,000	91,200	114,000
Total costs:
Total variable costs	$24,480	d. $	j. $
Total fixed costs	27,360	e.	k.
Total costs	$51,840	f. $	l. $
Cost per unit
Variable cost per unit	a. $	g. $	m. $
Fixed cost per unit	b.	h.	n.
Total cost per unit	c. $	i. $	o. $

Answer 1

Variable cost per unit is always constant and total Variable costs increases with the increase in units produced.

Total fixed costs is always constant and Fixed cost per unit decreases with the increase in production.

Memory chips produced	72,000	91,200	114,000
Total costs:
Total variable costs	$24,480	d. $31,008 ($0.34*91,200)	j. $38,760 ($0.34*114,000)
Total fixed costs	$27,360	e. $27,360	k. $27,360
Total costs	$51,840	f. $58,368	l. $66,120
Cost per unit
Variable cost per unit	a. $0.34 ($24,480/72,000)	g. $0.34	m. $0.34
Fixed cost per unit	b. $0.38 ($27,360/72,000)	h. $0.3 ($27,360/91,200)	n. $0.24 ($27,360/114,000)
Total cost per unit	c. $0.72	i. $0.64	o. $0.58