Relevant Range and Fixed and Variable Costs Third World Gamer Inc. manufactures
ID: 2551841 • Letter: R
Question
Relevant Range and Fixed and Variable Costs Third World Gamer Inc. manufactures components for computer games within a relevant range of 100,800 to 158,400 disks per year. Within this range, the following partially completed manufacturing cost schedule has been prepared Components produced Total costs 100,800 123,200 158,400 $40,320 44,352 $84,672 i) Total variable costs Total fixed costs Total costs Cost per unit: Variable cost per unit Fixed cost per unit Total cost per unit Complete the cost schedule below. Round costs per unit to the nearest cent.Explanation / Answer
In This Question, Variable Cost per unit is ($40320/100800) is $0.4 Per unit However, Total Fixed cost Remains the same .i.e. $44352 , It is insignificant that change in the units. So, Cost Schedule as follows. Components Produced 100800 123200 158400 Total Costs: Variable (0.4 Per Unit) 40320 49280 63360 Fixed Cost 44352 44352 44352 Total Cost 84672 93632 107712 Cost Per unit Variable Cost Per unit 0.4 0.4 0.4 Fixed Cost Per Unit 0.44 0.36 0.28 Total Cost Per unit 0.84 0.76 0.68 Hence, Increase in Number of Components Produced lead to Decrease in total cost per unit.