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Assume a scattergraph shows $440 at no activity and $2540 at an activity level of 1250...

Assume a scattergraph shows $440 at no activity and $2540 at an activity level of 1250 units. The variable cost per unit is

$2.03. $0.71. $1.68. $4.06.

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Answer #1

Answer: 3rd option)$1.68

Explanation:

Since at no activity level the total cost is $440, this $440 is the fixed cost i.e. the cost that has to be incurred even at no activity level.

Further, at the level of 1250 units the total cost is $2,540. Out of this $2,540, we know that $440 must be fixed cost and rest will be variable cost. Thus;

Total Variable Cost=2540-440=$2,100

Variable cost per unit=2100/1250=$1.68

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