In: Accounting
The following are the total cost for differing amounts of units of hammers. Units Total Cost 26,200 $975,000 44,100 $1,456,400 18,700 $770,600 27,600 $1,011,100 34,400 $1,197,700 What is the variable cost per unit? Using your answer in the above question, estimate the total cost for 25,000 hammers.
Total cost for 25,000 hammers= $ 941,984.08 or $ 941,984
Working
Cost | No. of cavities | ||
A | High Level | $ 11,97,700.00 | 34400 |
B | Low Level | $ 7,70,600.00 | 18700 |
C=A-B | Difference | $ 4,27,100.00 | 15700 |
A | Cost difference | $ 4,27,100.00 | |
B | No. of cavities difference | 15700 | |
C=A/B | Variable cost per unit | $ 27.20 | |
High Level | Low Level | ||
A | No. of cavities | 34400 | 18700 |
B | Variable cost per unit | $ 27.20 | $ 27.20 |
C=AxB | Total Variable cost | $ 9,35,811.46 | $ 5,08,711.46 |
D | Total cost | $ 11,97,700.00 | $ 7,70,600.00 |
E=D-C | Total fixed cost | $ 261,888.54 | $ 261,888.54 |
Production level in units | 25000 |
Variable cost | $ 680,096 |
Fixed cost | $ 261,889 |
Total cost | $ 941,984.08 |