Question

Direct labor, materials, selling expenses, and other variable costs are forecast to be $5.20, $4.70, $2.30, and $0.80, respectively in year 1 and grow with inflation.

Lease payment, property taxes, administration, advertising, and other cash fixed costs are expected to be $6,100, $1730, $4680, $2,120, and $2730, respectively in year 1 and grow with inflation.

What are the Total Variable Cost per Unit and Total Cash Fixed Costs?

Answer 1

SOLUTION :::

1)VARIABLE COST PER UNIT

Direct labour            $ 5.20.
Direct material.        $4.70.
Selling expenses.    $ 2.30.
Other variable cot. $ 0.80.

.    TOTAL = $13.00.per unit

2) TOTAL FIXED COST

Lease payments             $6100

Property tax                    $ 1730

Administration cost. . $ 4680.

Advertising cost            $ 2120

Other fixed cost             $2730.

TOTAL FIXED COST = $17,360.

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