Essay

Management Accounting

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To calculate the unit cost of the fixed variable (building rent), divide the total fixed cost ($9000) by the total number produced (1000). The fixed unit cost when 1000 units are sold is $9 (9000 / 1000 = 9), but it changes to $1.125 when 8000 hamburgers are sold (9000 / 8000 = 1.125). Table 1 ? Unit Costs 1000 Annual Units Sold 6000 Annual Units Sold 8000 Annual Units Sold Raw Materials (cost/hamburgers) Variable cost $...
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Table 2 identifies the total annual costs based on units sold. The total annual cost of the raw materials (cost for hamburgers) increases and the number of annual units sold increases. This is calculated by multiplying the unit cost by the total annual units sold. Notice the fixed cost (building rent) is not affected by the sales volume so the cost remains constant...
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