At an activity level of 8,800 units, Pember Corporation's
total variable cost is $146,520 and its total fixed cost is
$219,296. For the activity level of 8,900 units, compute the
following values.
Required:
A. The total variable cost
B. The total cost
C. The average variable cost per unit
D. The average fixed cost per unit
E. The average total cost per unit
Can someone please help me get started? I am so lost with these. Like a formula would help. thanks!
Sure, I'd be happy to help you get started! Let's first understand what each term means:
1. Total Variable Cost: The cost that varies with the activity level (number of units produced).
2. Total Fixed Cost: The cost that remains constant regardless of the activity level.
3. Average Variable Cost per Unit: The total variable cost divided by the number of units.
4. Average Fixed Cost per Unit: The total fixed cost divided by the number of units.
5. Average Total Cost per Unit: The sum of the average variable cost per unit and the average fixed cost per unit, or the total cost divided by the number of units.
Now, let's use the provided information to calculate the required values:
At an activity level of 8,800 units:
Total Variable Cost = $146,520
Total Fixed Cost = $219,296
We can calculate the Variable Cost per Unit (VCP) at this activity level:
VCP = Total Variable Cost / Activity Level
VCP = $146,520 / 8,800 units
VCP ≈ $16.64 per unit
Now, let's calculate the required values for an activity level of 8,900 units:
A. The total variable cost:
Total Variable Cost = Variable Cost per Unit × Activity Level
Total Variable Cost = $16.64 × 8,900 units
Total Variable Cost ≈ $148,096
B. The total cost:
Total Cost = Total Variable Cost + Total Fixed Cost
Total Cost = $148,096 + $219,296
Total Cost = $367,392
C. The average variable cost per unit:
Average Variable Cost per Unit = Total Variable Cost / Activity Level
Average Variable Cost per Unit = $148,096 / 8,900 units
Average Variable Cost per Unit ≈ $16.64
D. The average fixed cost per unit:
Average Fixed Cost per Unit = Total Fixed Cost / Activity Level
Average Fixed Cost per Unit = $219,296 / 8,900 units
Average Fixed Cost per Unit ≈ $24.66
E. The average total cost per unit:
Average Total Cost per Unit = Average Variable Cost per Unit + Average Fixed Cost per Unit
Average Total Cost per Unit = $16.64 + $24.66
Average Total Cost per Unit ≈ $41.30
Of course, I can help you with that!
To solve this problem, we need to make use of some key formulas:
A. The total variable cost:
Total Variable Cost = Variable Cost per Unit * Activity Level
B. The total cost:
Total Cost = Total Variable Cost + Total Fixed Cost
C. The average variable cost per unit:
Average Variable Cost per Unit = Total Variable Cost / Activity Level
D. The average fixed cost per unit:
Average Fixed Cost per Unit = Total Fixed Cost / Activity Level
E. The average total cost per unit:
Average Total Cost per Unit = Total Cost / Activity Level
With these formulas in mind, we can now calculate the values for the activity level of 8,900 units.
Let's substitute the given values into each formula.
A. Total Variable Cost:
Given:
Activity Level for 8,900 units
From the given information, we can compute the variable cost per unit using the following formula:
Variable Cost per Unit = Total Variable Cost / Activity Level
Substituting the given values:
Variable Cost per Unit = $146,520 / 8,800 units
Now, we can calculate the Total Variable Cost:
Total Variable Cost = Variable Cost per Unit * Activity Level
B. Total Cost:
Given:
Total Fixed Cost: $219,296
We have already calculated the Total Variable Cost in step A.
Now, we can calculate the Total Cost using the formula:
Total Cost = Total Variable Cost + Total Fixed Cost
C. Average Variable Cost per Unit:
We have already calculated the Total Variable Cost in step A.
To find the Average Variable Cost per Unit, use the formula:
Average Variable Cost per Unit = Total Variable Cost / Activity Level
D. Average Fixed Cost per Unit:
Given:
Total Fixed Cost: $219,296
To find the Average Fixed Cost per Unit, use the formula:
Average Fixed Cost per Unit = Total Fixed Cost / Activity Level
E. Average Total Cost per Unit:
We have already calculated the Total Cost in step B.
To find the Average Total Cost per Unit, use the formula:
Average Total Cost per Unit = Total Cost / Activity Level
By substituting the given values into the formulas, you will be able to calculate each value for the activity level of 8,900 units.
Sure! I'll help you get started with the formulas for each of the values you need to compute.
A. The total variable cost: This can be calculated using the formula:
Total Variable Cost = Variable Cost per Unit * Number of Units
B. The total cost: This can be calculated using the formula:
Total Cost = Total Variable Cost + Total Fixed Cost
C. The average variable cost per unit: This can be calculated using the formula:
Average Variable Cost per Unit = Total Variable Cost / Number of Units
D. The average fixed cost per unit: This can be calculated using the formula:
Average Fixed Cost per Unit = Total Fixed Cost / Number of Units
E. The average total cost per unit: This can be calculated using the formula:
Average Total Cost per Unit = Total Cost / Number of Units
Now that you have the formulas, you can plug in the given values and calculate each of the values for the activity level of 8,900 units.