Question

In: Accounting

The following are the total cost for differing amounts of units of hammers. Units Total Cost...

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.

Solutions

Expert Solution

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

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