A firm is reviewing a project with labor cost of $6.80 per unit, raw materials c

Question

A firm is reviewing a project with labor cost of $6.80 per unit, raw materials cost of $23.05 a unit, and fixed costs of $14,000 a month. Sales are projected at 8,800 units over the 3-month life of the project. What are the total variable costs of the project?

A firm is reviewing a project with labor cost of $6.80 per unit, raw materials cost of $23.05 a unit, and fixed costs of $14,000 a month. Sales are projected at 8,800 units over the 3-month life of the project. What are the total variable costs of the project?

Explanation / Answer

Total variable cost = Total amoun spent on labor ($6.80 per unit * 8,800 units) + Total amount spent on raw material ($23.05 per unit * 8,800 units) = $262,680.

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