The Highest Value of Total Cost Was $70,000 in June

question 267

Multiple Choice

The highest value of total cost was $70,000 in June for Acai Beverages,Inc.Its lowest value of total cost was $52,000 in December.The company makes a single product.The production volume in June and December were 13,000 and 7000 units,respectively.What is the variable cost per month? (Round your answer to the nearest cent.)

• A) $1.38 per unit
• B) $2.57 per unit
• C) $3.00 per unit
• D) $11.67 per unit

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Definitions:

Direct Labor

Workers or employees who are directly involved in the production of goods or services, whose labor can be easily traced to the product.

Committed Fixed Costs

Long-term fixed costs that cannot be easily altered in the short term, such as leases, depreciation on equipment, and salaries of permanent employees.

Short Run

A period in which at least one factor of production is fixed, allowing limited adjustments to production or operational levels.

Variable Costs Per Unit

The costs that vary directly in proportion to changes in the level of production or sales volume.