Question
Asked Feb 6, 2020
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The following estimates have been prepared for a project:

 

Fixed costs: $36,000
Depreciation: $24,000
Sales price per unit: $4
Accounting break-even: 40,000 units

 

What must be the variable cost per unit? (Round your answer to 2 decimal places.)

 

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Expert Answer

Step 1

Variable cost is the cost which changes with the change in the output produced. In other words, the expenses incurred to produce the specified number of goods and services.

Step 2

Given Information:

Fixed costs are $36,000

Breakeven point (in units) is 40,000

Depreciation expense is $24,000

Sales price per unit is $4

Step 3

Formula used:

Finance homework question answer, step 3, image 1

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