Mastel Company has a variable selling cost. If sales volume i cost per unit beha
ID: 2392652 • Letter: M
Question
Mastel Company has a variable selling cost. If sales volume i cost per unit behave? s, how will the total variable cost and the variable Total Variable Cost Variable Cost Per Unit A. Increase B. Increase C. Increase D. Remain constant E. Decrease O Choice A O Choice B O Choice C O Choice tD O ChoiceE Increase Remain constant Decrease Decrease Increase QUESTION 25 The following data are available for product no. CK74, manufactured and sold by Ruby Corporation: 4.500 units Maximum capacity with present facilities Total fixed cost (per period) Variable cost per unit Sales price per unit $120.29 $200.48 The number of units of CK74 that Ruby must sell to break- even is (rounded, if necessary): 30,000. 20,500.Explanation / Answer
Solution 24:
If sales volume increases, total variable cost will also increase, however per unit variable cost will remain the same.
Hence choice B is correct.
Solution 25:
Selling price per unit = $200.48
Variable cost per unit = $120.29
Contribution margin per unit = $200.48 - $120.29 = $80.19
Fixed costs = $986,337
Breakeven point in units = Fixed costs / contribution margin per unit = $986,337 / $80.19 = 12300 units