Mike Company has provided the following data -  This Year Last Year Units Sold 400,000 350,000 Sales Revenue $1,300,000 $1,050,000 Less: Cost of Goods Sold 910,000 735,000 Gross Margin 390,000 315,000 Less: Operating Expenses 272,000 260,000 Operating Income $118,000 $55,000 What is the best estimate of the company's variable operating expense per unit? What is the best estimate of the company's total fixed operating expense per year? 

Computation of the company's variable operating expense per unit:-

Change in Operating Expense = This year operating expenses - Last year operating expenses

= $272,000 - $260,000

= $12,000

Change in units = This year unit sold - Last year unit sold

= 400,000 - 350,000

= 50,000 units

Variable operating expense per unit = Change in operating expenses / Change in units

= $12,000 / 50,000

= $0.24 per unit

Computation of the company's total fixed operating expense per year:-

Total fixed operating expense per year = Total Operating expense - Total variable operating expenses

= $272,000 - (400,000 * $0.24)

= $272,000 - $96,000

= $176,000