Calculate the variable costs per unit within the relevant range. (Round answer to 2 de Variable costs per unit per unit tA $
Calculate the variable costs per unit within the relevant range. (Round answer to 2 de Variable costs per unit per unit tA $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![**Homework for Chapter 18 Learning Objective 1 - Cost Behavior**
**Question 3 of 3**
(c)
Your answer is incorrect.
Calculate the variable costs per unit within the relevant range. *(Round answer to 2 decimal places e.g., 2.25.)*
**Variable costs per unit**: $ [Input Box]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F17131f96-6adc-42bc-a824-aa6fc6cf83c6%2F4159c30a-35a4-42c1-9f58-abed2247f3c1%2F4eb31pq_processed.png&w=3840&q=75)
Transcribed Image Text:**Homework for Chapter 18 Learning Objective 1 - Cost Behavior**
**Question 3 of 3**
(c)
Your answer is incorrect.
Calculate the variable costs per unit within the relevant range. *(Round answer to 2 decimal places e.g., 2.25.)*
**Variable costs per unit**: $ [Input Box]
Transcribed Image Text:**Cost Behavior Analysis for Wildhorse Enterprises**
Wildhorse Enterprises is evaluating the potential costs associated with the production of a new product. The projected expense breakdown for various levels of output is detailed in the table below. This analysis helps in understanding how costs behave with changes in production volume.
| Output in Units | Rent Expense | Direct Materials |
|-----------------|--------------|------------------|
| 1,000 | $5,710 | $4,568 |
| 2,000 | $5,710 | $8,700 |
| 3,000 | $9,136 | $8,700 |
| 4,000 | $9,136 | $11,600 |
| 5,000 | $9,136 | $14,500 |
| 6,000 | $9,136 | $17,400 |
| 7,000 | $9,136 | $20,300 |
| 8,000 | $9,136 | $23,200 |
| 9,000 | $11,420 | $33,461 |
| 10,000 | $11,420 | $39,970 |
| 11,000 | $11,420 | $50,248 |
**Summary:**
- **Rent Expense:** Initially stable at $5,710 up to 2,000 units, then increases to $9,136 and remains constant until 8,000 units. After 8,000 units, it rises to $11,420.
- **Direct Materials:** Increases proportionally with output, indicating a variable cost structure.
This table illustrates how both fixed and variable costs contribute to the overall expense in manufacturing, aiding in budgeting and pricing strategies.
Expert Solution
Step 1
The relevant range refers to the range under which the total fixed costs remain stagnant or the same to a point and the variable cost per unit increases or decreases.
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