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

question 91

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: $$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Units } \\\text { Demanded }\end{array} & \begin{array} { c } \text { Unit } \\\text { Price }\end{array} & \begin{array} { c } \text { Total Variable } \\\text { Costs }\end{array} \\\hline 73,000 & \$ 31 & \$ 1,606,000 \\83,000 & 30 & 1,826,000 \\93,000 & 29 & 2,046,000 \\103,000 & 28 & 2,266,000 \\113,000 & 27 & 2,486,000\\\hline\end{array}$$ 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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Definitions:

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