Fixed versus fixed cost behavior

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Reference no: EM1348404

Lovvern Trophies makes and sells trophies to little league ball players. The company normally produces and sells between 8,000 and 14,000 trophies per year. The following cost data apply to various activity levels.

Number of Trophies 8,000 10,000 12,000 14,000
Total Costs incurred
Fixed $42,000
Variable $42,000
Total Costs $84,000
Cost per unit
Fixed $5.25
Variable $5.25
Total cost per trophy $10.50

Required:

a. Complete the proceeding table by filling out the missing amounts for the levels of activity shown in the first row of the table. Round all cost per unit figures to the nearest whole penny.

b. Explain why the total cost per trophy decreases as the number of trophies increases.

Reference no: EM1348404

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