What is the per-unit variable cost if a corporation reported sales of $160,000 with fixed costs of $20,000 and an income of $80,000?

What is the per-unit variable cost if a corporation reported sales of $160,000 with fixed costs of $20,000 and an income of $80,000?

• A. $2.00
• B. $3.00
• C. $4.00
• D. $5.00

Answer: (B)

To determine the per-unit variable cost, we first need to understand how costs are structured in this scenario. The total sales amount is $160,000, and the corporation has fixed costs of $20,000. The income reported, which is often referred to as profit, is $80,000. To find the total variable costs, we can utilize the following relationship: Income (Profit) = Sales - Total Costs Where Total Costs = Fixed Costs + Variable Costs. Given that: - Sales = $160,000 - Fixed Costs = $20,000 - Income (Profit) = $80,000 We can rearrange the income formula to find the total costs: Total Costs = Sales - Income Total Costs = $160,000 - $80,000 Total Costs = $80,000 Now, we can plug this value into the total cost equation: Total Costs = Fixed Costs + Variable Costs $80,000 = $20,000 + Variable Costs To find the variable costs, subtract the fixed costs: Variable Costs = $80,000 - $20,000 Variable Costs = $60,000 Now, to determine the per-unit variable cost, we need to know the number

To determine the per-unit variable cost, we first need to understand how costs are structured in this scenario. The total sales amount is $160,000, and the corporation has fixed costs of $20,000. The income reported, which is often referred to as profit, is $80,000.

To find the total variable costs, we can utilize the following relationship:

Income (Profit) = Sales - Total Costs

Where Total Costs = Fixed Costs + Variable Costs.

Given that:

• Sales = $160,000

• Fixed Costs = $20,000

• Income (Profit) = $80,000

We can rearrange the income formula to find the total costs:

Total Costs = Sales - Income

Total Costs = $160,000 - $80,000

Total Costs = $80,000

Now, we can plug this value into the total cost equation:

Total Costs = Fixed Costs + Variable Costs

$80,000 = $20,000 + Variable Costs

To find the variable costs, subtract the fixed costs:

Variable Costs = $80,000 - $20,000

Variable Costs = $60,000

Now, to determine the per-unit variable cost, we need to know the number