Question

Your company is reviewing a project with estimated labor costs of $20.20 per unit, estimated raw material costs of $36.18 a unit, and estimated fixed costs of $20,000 a month. Sales are projected at 42,000 units over the one-year life of the project. What would the total variable costs be if the actual variable costs per unit are 5% higher than estimated and the actual sales number is 5% lower than estimated

Answer 1

Answer:

Actual unitary variable cost= $59.2

Explanation:

Giving the following information:

Your company is reviewing a project with estimated labor costs of $20.20 per unit and estimated raw material costs of $36.18 a unit.

First, we need to calculate the estimated total unitary variable cost:

Unitary variable cost= 20.2 + 36.18= $56.38

Now, the actual variable cost:

Actual unitary variable cost= 56.38*1.05

Actual unitary variable cost= $59.2