Adens Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows: Average Cost per UnitDirect materials $ 6.25Direct labor $ 2.80Variable manufacturing overhead $ 1.55Fixed manufacturing overhead $ 2.40Fixed selling expense $ 0.50Fixed administrative expense $ 0.40Sales commissions $ 1.00Variable administrative expense $ 0.50If 5,000 units are sold, the variable cost per unit sold is closest to:a. $53,000 b. $65,000 c. $60,500 d. $77,000

c. $60,500

$12.10 per unit.

Explanation:

The variable cost is the one which varies with the number of units produced. Adens Corporation has incurred variable and fixed cost for its unit’s production. To identify per unit variable cost for Adens Corporation we add up all the variable cost per unit and then multiply by units sold in the period which are 5,000 units to get total variable cost.

Variable cost per unit = Direct Material per unit + Direct Labor per unit + Variable manufacturing overheads per unit + Sales Commission per unit + Variable administrative expense per unit.

Variable cost per unit = $6.25 + $2.80 + $1.55 + $1.00 + $0.50.

Variable cost per unit = $12.10

Total variable cost for 5,000 units = $12.10 *5000 unit.

= $60,500.

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