Calico Joe Fabrics Sells a Single Product How Would You Best Describe Calico's Variable Cost Per Unit

question 128

Multiple Choice

Calico Joe Fabrics sells a single product. The company estimates total fixed costs at $360,000 with demand and unit variable costs at various activity levels as follows:
$$\begin{array} {| c | c | c | } \hline \text { Units Demanded } & \text { Unit Price } & \text { Total Variable Costs } \\\hline 7,000 & \$ 31 & \$ 1,606,000 \\83,000 & 30 & 1,826,000 \\93,000 & 29 & 2,046,000 \\103,000 & 28 & 2,266,000 \\113,000 & 27 & 2,486,000\\\hline\end{array}$$
How would you best describe Calico's variable cost per unit over the range shown?

• A) It is constant.
• B) It is increasing as volume increases.
• C) It is decreasing as volume increases.
• D) There is not enough information provided to determine the answer.

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