Question

Homework: Cost Behavior and Cost Prediction
	Oct	Nov
Unit Sales	4,000	6,000
Cost of Food Sold	$    2,000	$    3,000
Depreciation	500	500
Supplies	500	750
Wages and Salaries	5,000	5,500
Utilities	1,400	1,500
Rent	4,000	4,000
Total	$ 13,400	$ 15,250
What is the Unit Variable Cost and Fixed Costs?
Predict the Average and Total Costs for		7000	units

Answer 1

Calculation of unit variable cost & fixed cost
			Increase in cost for increase in units	Increase %	Cost	Fixed costs for 7000 units	Calculation	Variable costs for 7000 units	Calculation
Unit Sales	4000	6000	2000	50%	Variable cost	7000		7000
Cost of Food Sold	2000	3000	1000	50%	Variable cost since increase in units % = Increase in % variable cost	-	NA	3,500	100% Variable cost
Depreciation	500	500	0	0%	Fixed cost	500	100% Fixed cost	-	NA
Supplies	500	750	250	50%	Variable cost	-	NA	875	100% Variable cost
Wages and Salaries	5000	5500	500	10%	Semi variable cost	4,000	(5500-(500/2000*6000))	1,750	(500/2000*7000)
Utilities	1400	1500	100	7%	Semi variable cost	1,200	(1500-(100/2000*6000))	350	(100/2000*7000)
Rent	4000	4000	0	0%	Fixed cost	4,000	100% Fixed cost	-	NA
Total	$ 13,400	$ 15,250				9,700		6,475
					Cost per unit	1.39		0.93
Unit variable cost	$0.93
Unit Fixed cost	$1.39