Question

11. H&H Bagels sells bagels in packages of six bagels. In April 2020, H&H sold 15,000 packages with a unit price of $8.80 each. H&H had $45,895 of fixed costs and calculated its breakeven volume at 6,850 packages for the month of April. What were H&H’s variable costs per unit and how much did H&H incur in total variable costs in April? A. $6.70 and $100,500 B. $2.10 and $14,385 C. $2.10 and $31,500 D. $6.70 and $45,895

Answer 1

Answer:

The correct answer is C.

Explanation:

Giving the following information:

In April 2020, H&H sold 15,000 packages with a unit price of $8.80 each. H&H had $45,895 of fixed costs and calculated its breakeven volume at 6,850 packages for April.

To calculate the unitary variable cost, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

6,850= 45,895 / ( 8.8 - unitary variable cost)

60,280 - 6,850unitary variable cost = 45,895

unitary variable cost= 14,385/6,850

unitary variable cost= $2.1

Total variable cost= 15,000*2.1= $31,500