ABC Company produces nail brushes for domestic use. It sells 80, 000 in a year. Raw materials cost textsterling0.15 per brush and other variable costs per year are textsterling48, 000. Fixed costs amount to textsterling60, 000. What is the total cost per unit?

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

ABC Company produces nail brushes for domestic use. It sells 80, 000 in a year. Raw materials cost £0.15 per brush and other variable costs per year are £48, 000. Fixed costs amount to £60, 000. What is the total cost per unit?

A	£1.50
B	£1.35
C	£1.00
D	£0.75

Explanation:

Detailed explanation-1: -Examples of variable costs include raw materials, sales commissions, packaging and shipping, manufacturing labor, and credit card fees.

Detailed explanation-2: -Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range.

Detailed explanation-3: -Electricity is a good example of a semi-variable cost. The base rate for service may be constant, but as production grows, power consumption and the company’s electricity bills go up. In other words, there is both a fixed and variable aspect to semi-variable costs.

Detailed explanation-4: -Variable Costs. A variable cost is one whose total dollar amount varies in direct proportion to changes in the activity level. When expressed on a per unit basis, variable costs are constant.

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ECONOMICS

COST ACCOUNTING

COST BEHAVIORS