ABC Corp. The company has fixed costs of $300,000. Total costs, both fixed and variable, are...

ABC Corp. The company has fixed costs of $300,000. Total costs, both fixed and variable, are $378,000 when 40,000 units are produced. How much is the variable cost per unit? (Please round to the nearest cent.)

The following information pertains to the ABC Corporation:

Total Units for information given	7000
Fixed Cost per Unit	$200
Selling Price per Unit	$325
Variable Costs per Unit	$225
Target Operating Income	$100,000

How many units need to be sold in order to reach the target profit? (Round your final calculation to the nearest unit.)

Solutions

Expert Solution

Question 1

Solution

Variable cost per unit = $1.95 per unit

Working

Total cost	$ 378,000.00
Less: Fixed cost	$ 300,000.00
Total variable cost	$ 78,000.00
Variable cost per unit (78000/40000)	$ 1.95 per unit

Question 2

Solution

Units to be sold = 15000 units

Working

A	Sale Price per unit	$ 325.00
B	Variable Cost per Unit	$ 225.00
C=A x B	Unit Contribution	$ 100.00
D	Total Fixed cost + desired profit	$ 1,500,000.00
E=D/C	Units to be sold	15,000

ekkarill92 answered 2 months ago

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