Question

On the unit cost graph, why are variable costs per unit horizontal and fixed while total costs per unit are downward sloping?

Answer #1

Because a fixed cost per unit is decreasing.

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total cost per unit is the sum of variable cost per unit and fixed cost per unit.

Fixed cost is the same at all level of output, and fixed cost per unit decreases as output increases.

The variable cost per unit is horizontal and fixed means it is constant per unit.

total cost per unit =variable cost per unit + fixed cost per unit

variable cost per unit is fixed

fixed cost per unit is decreasing

it means the total cost per unit is also decreasing.

Calculate the total variable cost per unit.
Variable cost per unit
Calculate the total fixed expense for the year.
Total fixed expense for the year
Operating income
Operating loss
Sales
Total contribution margin
Total fixed cost
Total variable cost
Head-First Company plans to sell 5,000 bicycle helmets at $75
each in the coming year. Product costs include:
Direct materials per helmet
$ 30
Direct labor per helmet
8
Variable factory overhead per helmet
4
Total fixed factory overhead
20,000
Variable...

Total fixed cost = $66,000
Selling price per unit = $14
Variable costs per unit = $6
Net target income (after tax) = $52,000
Tax rate = 35%.
a)Calculate break even point in units
b) calculate the sales revenue (in dollars) required to achieve
the target income
c) calculate the difference in operating income when one extra
unit is sold
d) if fixed cost increased by 20%, what is the new unit
contribution margin required to maintain the same break-even...

Consider a firm that is currently producing 600 sofas a month.
The monthly fixed cost is $1,920, while the average total cost is
$72 (the average total cost curve has the usual shape). Producing
the 600th sofa increased the firm’s total costs by $70. At Q = 600,
is the firm’s average variable cost curve upward sloping,
horizontal, downward sloping, or vertical? Why? Explain clearly
your reasoning in words.

Sales Price: $50.00 per unit Variable Costs: $20.00 per unit
Total Fixed Costs: $90,000 What is the break-even point in sales
dollars?

Warson Manufacturing sells a product for $1,200 per unit. Fixed
costs are $32,000, while the variable costs are $400 per unit. If
the company has a 20% margin of safety, how many units were
actually sold?

If variable manufacturing costs are $10 per unit and total fixed
manufacturing costs are $631,900, what is the manufacturing cost
per unit if:
a. 7,100 units are manufactured and the company
uses the variable costing concept?
b. 8,900 units are manufactured and the company
uses the variable costing concept?
c. 7,100 units are manufactured and the company
uses the absorption costing concept?
d. 8,900 units are manufactured and the company
uses the absorption costing concept?

If variable manufacturing costs are $12 per unit and total fixed
manufacturing costs are $596,400, what is the manufacturing cost
per unit if
a. 7,100 units are manufactured and the company
uses the variable costing concept?
$___________
b. 8,400 units are manufactured and the company
uses the variable costing concept?
$___________
c. 7,100 units are manufactured and the company
uses the absorption costing concept?
$__________
d. 8,400 units are manufactured and the company
used the absorption costing concept?
$__________

Fixed manufacturing costs are $42 per unit, and variable
manufacturing costs are $126 per unit. Production was 89,000 units,
while sales were 83,660 units.
b. Determine the difference in variable costing
and absorption costing operating income.
$

Total fixed costs = $1,000,000
Unit Price = $5,515
Unit Variable Cost = $2,170
Find the breakeven volume. What happens to the breakeven volume if
the unit price falls to $5,000 and unit variable cost rises to
$2,500? Discuss your findings and show all work!

A company has $6.70per unit in variable costs and $3.00 per unit
in fixed costs at a volume of 50,000 units. If the company marks up
total cost by 0.54, what price should be changed if 57,000 units
are expected to be sold?
Round to two decimal
places

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