Information Flag question QUESTION 1 Consider the following information when level of activity or volume (LAV) is 100 units: Total variable costs $50000 Total fixed costs $10000 Required: Calculate (6 marks): Question Total costs when LAV is 50 units = $ Not yet answered Marked out of 1

1. Fixed cost remains same at every unit so from the question, fixed cost at 100 units is $10,000 hence it will remain $10,000 at every unit.

Variable cost per unit = $50,000/100 units = $500 per unit

Variable cost at 50 units = $500 * 50 = $25,000 units

Total cost when LAV is 50 units = Fixed cost + Variable cost = $10,000 + $25,000 = $35,000

2. Variable costs at 200 units = $500 * 200 = $100,000

Total cost when LAV is 200 units = $10,000 + $100,000 = $110,000

Unit cost when LAV is 100 units = Total cost/ Number of units = $110,000/200 = $550 per unit

3. When LAV is zero units, no variable cost will be incurred only fixed cost will be incurred.

Total cost when LAV is zero units = $10,000 + 0 = $10,000

Unit cost when LAV is zero units = Total cost/ Number of units = $10,000/0 which cannot be defined

4. Total cost when LAV is zero units = $10,000 + 0 = $10,000