Answer to exam 2 review questions

Answer to exam 2 review questions - 1. October variable...

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1. October variable cost per unit = $10,000 ÷ 5,000 units = $2.00 per unit November variable costs = $2.00 × 10,000 units = $20,000 Fixed costs do not change with changes in activity level, so November fixed costs will be the same as October, or $30,000. Total costs for November - November variable costs - November fixed costs = November mixed costs $75,000 - $20,000 - $30,000 = $25,000 2. Variable cost per unit: $35,000 ÷ 10,000 units = $3.50 per unit Fixed cost per unit = $20,800 ÷ 16,000 units = $1.30 per unit Total cost at 16,000 units = $20,800 + ($3.50 × 16,000) = $76,800 Total unit cost = $76,800 ÷ 16,000 units = $4.80 3. 4. Variable cost = Change in cost ÷ Change in activity = ($9,600 - $600) ÷ (1,000 - 0) = $9.00 Since the regression line passes through the Y axis at the $600 point, the $600 represents the fixed costs. Therefore, the cost formula would be Y = $9.00X + $600
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5. Variable cost = Change in cost
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Answer to exam 2 review questions - 1. October variable...

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