Question

Tina’s Manufacturing Company reported total variable cost of $1,000,000. The managerial accountant reported 50,000 total number of units. What is the target variable cost per unit? Tina’s Manufacturing Company Target Variable Cost per Unit Target total cost $4,000,000 Less: Fixed costs $3,000,000 Target total variable cost $1,000,000 Number of units 50,000 Target variable cost per unit ?

Answer 1

Answer:

$20 per unit

Explanation:

Given that,

Target total cost = $4,000,000

Fixed costs = $3,000,000

Number of units = 50,000

Total target variable cost:

= Target total cost - Fixed costs

= $4,000,000 - $3,000,000

= $1,000,000

Target variable cost per unit:

= Total target variable cost ÷ Number of units

= $1,000,000 ÷ 50,000

= $20 per unit