Can U Do This (at home)? On 7/1, there were 8,000 units in inventory. During Jul
ID: 2513136 • Letter: C
Question
Can U Do This (at home)? On 7/1, there were 8,000 units in inventory. During July, UGA, Inc sold 2,500 units at $20/unit. Unit Determine the total unit production cost at different levels of production: based on # units PRODUCED Level of Production 1,000 units 2,500 units 5,000 units 7/31 Inventory (units) 7/31 Inventory balance (S) Operating Expenses: Unit operating expenses based on Unit Total Variable: Fixed: Total $3,250 5,000 Do you expect GAAP or VC income to be higher when production is 1,000 u? 2,500 units? 5,000 units? Why? GAAP Cost of Goods sold-Explanation / Answer
The unit variable production cost for different quantity of production would be calculated as following:
Total variable production cost for production of 1,000 units shall be divided by 1,000 units to calculate unit variable production cost.
Total fixed costs shall be divided by 1,000 units to ascertain the unit fixed production cost.
Total variable production cost for production of 2,000 units shall be divided by 2,000 units to calculate unit variable production cost.
Total fixed costs shall be divided by 2,000 units to ascertain the unit fixed production cost.
Total variable production cost for production of 5,000 units shall be divided by 5,000 units to calculate unit variable production cost.
Total fixed costs shall be divided by 5,000 units to ascertain the unit fixed production cost.
The GAAP or VC income will be higher for higher quantity of production. Thus, the VC income would be high for 5000 units followed by 2000 units and lowest for 1000 units.
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