Answer to exam 2 review questions

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

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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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## This note was uploaded on 02/08/2011 for the course ACCOUNTING 275 taught by Professor Ngo during the Spring '11 term at Rutgers.

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

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