Paolucci Corporation\'s relevant range of activity is 7,500 units to 15,500 unit
ID: 2565083 • Letter: P
Question
Paolucci Corporation's relevant range of activity is 7,500 units to 15,500 units. When it produces and sells 11,500 units, its average costs per unit are as follows:
Average
Cost per Unit
Direct materials $ 6.95
Direct labor $ 3.85
Variable manufacturing overhead $ 1.85
Fixed manufacturing overhead $ 3.00
Fixed selling expense $ 1.15
Fixed administrative expense $ 0.85
Sales commissions $ 1.10
Variable administrative expense $ 0.75
If 10,500 units are sold, the variable cost per unit sold is closest to:
Multiple Choice
$15.65
$19.50
$12.65
$14.50
Explanation / Answer
Total variable cost per unit=(Direct materials+Direct labor+Variable manufacturing overheads+Sales commissions+Variable adminsitrative expenses)
=(6.95+3.85+1.85+1.1+0.75)
=$14.50.
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