If Variable Manufacturing Costs Are $15 Per Unit and Total

question 131

Essay

If variable manufacturing costs are $15 per unit and total fixed manufacturing costs are $200,000,what is the manufacturing cost per unit if:
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(a)20,000 units are manufactured and the company uses the variable costing concept?
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(b)25,000 units are manufactured and the company uses the variable costing concept?
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(c)20,000 units are manufactured and the company uses the absorption costing concept?
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(d)25,000 units are manufactured and the company used the absorption costing concept?

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Definitions:

Mutually Beneficial Trades

Transactions between parties that improve the welfare of each participant.

Market Failures

Situations where the allocation of goods and services by a free market is not efficient, often leading to a loss of economic value.

Property Rights

Legal rights to possess, use, and dispose of assets, including real property or intellectual property, ensuring control and economic benefits to the rights holder.

External Costs

Costs of a transaction or activity that affect parties who are not directly involved in it, such as pollution affecting the wider community.