Question

Harper Inc. has fixed costs of $ 640000 when it produces 375000 units. Its total variable costs are $ 120000.

When Harper Inc. produces 420,000 ​units, its total variable costs will be _____.

Answer 1

$134,400

Step-by-step explanation:

To find the increase in Variable Cost due to rise in the number of units produced, first we need to find the per unit variable cost and then multiply that per unit cost with the new number of unit produced, to find the total variable cost of 420,000 units.

$120,000 / 375,000 units

Per unit variable cost = $0.32 per unit

Since the Fixed Cost remains constant. Let us multiply $0.32 per unit variable cost with 420,000 units, to find the total variable cost.

$0.32 per unit x 420,000 units

Total Variable Cost = $134,400