Answer:
1 = $600 + $20 × X
2. = $2000
3 = $2,600
4 = $26 per class
5 = a = $3,600
b = $24
c = the cost per unit has reduced from $26 to $24.
Explanation:
According to the scenario, computation of the given data are as follow:-
We assume no. of units = X
1.Total Labor Cost =Total Fixed Cost + (Variable Cost Per Unit × No. of Units)
= $600 + $20 × X
2. Last month 100 classes were taught.
Total Variable Cost = No. of Classes Taught × Variable Cost Per Class
= 100 × $20 = $2000
3. When 100 classes were taught, total labor cost is-
Total Labor Cost = Total Fixed Cost + (No. of Units × Variable Cost Per Units)
= $600 + 100 × $20
= $600 + $2,000
= $2,600
4. Per Classes Unit Cost of Labor =Total Labor Cost ÷ No. of Classes Taught
= $2,600 ÷ 100
= $26 per class
5. If the No. of taught classes increase by 50% then the no. of classes is offered = 100 + (100 × 50 ÷ 100) = 150
a). Total Labor Cost if the no. of classes taught are 150
Total Labor Cost = Total Fixed Cost + (No. of Units × Variable Cost Per Units)
= $600 + 150 × $20
= $600 + $3,000
= $3,600
b). Per Classes Unit Cost of Labor = Total Labor Cost ÷ No. of Classes Taught
= $3,600 ÷ 150
= $24
c). After the change in the level of the activity variable cost per unit and fixed cost per unit remain same. So if there is an increase in the taught classes then the cost per unit has reduced from $26 to $24.
