A company that produces toys, buys the electric unit for a train it is manufacturing at...
Question:
A company that produces toys, buys the electric unit for a train it is manufacturing at $8.00/unit. Suppose he can manufacture a unit equivalent to a variable cost of $4.00/unit. It is estimated that the additional fixed cost at the plant would be $12,000/year if the electronic unit were manufactured there.
What is the solution?
Variable Cost:
Variable cost is the cost that varies with the activity level. The total variable cost will be directly proportional to the activity level while the per-unit variable cost remains the same at all activity levels.
Answer and Explanation: 1
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View this answerThe purchase price of the unit is $8.00/unit and the variable cost to manufacture a unit is $4.00/unit.
The additional fixed cost at the plant would...
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Variable Cost: Definition, Formula & Examples
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Chapter 23 / Lesson 7
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Understand variable cost in business. Learn the definition of variable cost, the variable cost formula, and how to use the formula to calculate the variable cost.
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